Problem 9-2A (Part Level Submission) For the year ended December 31, 2015, Westl

Question

Problem 9-2A (Part Level Submission) For the year ended December 31, 2015, Westlake Ltd. had the following transactions related to the purchase of property. Assume all transactions are for cash unless otherwise stated Feb. 7 9 15 17 28 Mar. 2 July 2 Purchased real estate for $620,100, paying $153,300 cash and signing a mortgage payable for the balance. The site had an old building on it and the fair values of the land and building were $566,500 and $53,600, respectively. The old building will be demolished and a new apartment building will be constructed on the site Paid legal fees of $10,010 on the real estate purchase of February 7. Paid $34,500 to demolish the old building and make the land ready for the construction of the apartment building Received $8,300 from the sale of material from the demolished building Paid $2,000 to grade the land in preparation for the construction of the apartment building Paid architect fees of $36,720 to design the apartment building The full cost for construction of the apartment building was $1,286,200. Paid $359,700 cash and signed a bank loan payable for the balance Purchased a one-year insurance policy on the finished building for $5,750 Paid $23,930 for the paving of sidewalks and a parking lot for the building 3 Aug. 29

Explanation / Answer

Journal entries Date Accounts title and explanations Debit $ Credit $ 7-Feb Land Account Dr. 620100     Cash Account 153300      Mortgage payable 466800 9-Feb Land Account Dr. 10,010      Cash Account 10,010 15-Feb Land Account Dr. 34500      Cash Account 34500 17-Feb Cash Account Dr. 8300      Land account 8300 28-Feb Land Account Dr. 2000      Cash Account 2000 2-Mar Building Account Dr. 36720       Cash Account 36720 2-Jul Building Account Dr. 1286200       Cash Account 359700       Bank loan payable 926500 3-Jul Insurance Expense Dr. 5750        Cash Account 5750 29-Aug Land Improvements Dr. 23930       Cash Account 23930

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