Kendrick Company was organized on January 1. During the first year of operations

Question

Kendrick Company was organized on January 1. During the first year of operations, the following expenditures and receipts were recorded in random order.

Analyze the foregoing transactions using the following tabular arrangement. Insert the amounts in the appropriate columns and select appropriate account title for transactions falling under other column. (Enter credit transactions with negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Debits 1. Cost of real estate purchased as a plant site (land and building) $130,000 2. Accrued real estate taxes paid at the time of the purchase of the real estate 4,000 3. Cost of demolishing building to make land suitable for construction of a new building 10,000 4. Architect's fees on building plans 14,000 5. Excavation costs for new building 30,000 6. Cost of filling and grading the land 5,000 7. Insurance and taxes during construction of building 6,000 8. Cost of repairs caused by a small fire shortly after completion of building 7,000 9. Interest paid during the year, of which $45,000 pertains to the construction period 74,000 10. Full payment to building contractor 955,000 11. Cost of parking lots and driveways 36,000 12. Real estate taxes paid for the current year on the land 4,000     Total Debits $1,275,000 Credits 13. Insurance proceeds for fire damage $3,000 14. Proceeds from salvage of demolished building 3,500     Total Credit $6,500

Explanation / Answer

Item Land Buildings Other Account Title Cost of real estate purchased as a plant site (land and building) 130000 Accrued real estate taxes paid at the time of the purchase of the real estate 4000 Cost of demolishing building to make land suitable for construction of a new building 10000 Architect's fees on building plans 14000 Excavation costs for new building 30000 Cost of filling and grading the land 5000 Insurance and taxes during construction of building 6000 Cost of repairs caused by a small fire shortly after completion of building 7000 Interest paid during the year, of which $45,000 pertains to the construction period 45000 29000 Interest Expenses Full payment to building contractor 955000 Cost of parking lots and driveways 36000 Land Improvement Real estate taxes paid for the current year on the land 4000 Property Taxes Insurance proceeds for fire damage -3000 Proceeds from salvage of demolished building -3500

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