ACQUISITION COSTS 20 POINTS the Tarik Company began operation on January 1 of th

Question

ACQUISITION COSTS 20 POINTS the Tarik Company began operation on January 1 of the current vear. At the end of the year, company's auditor discovered that all expenditures involving long-term assets had bend ba to an account called Tangible Assets. An analysis of the account, which had a year-e of $1,722,100, disclosed that it contained the following items Cost of land Surveying costs Transfer of title and other fees required by the county Broker's fees for land Attorney's fees associated with land acquisition Cost of removing unusable timber from land Cost of grading land Cost of digging building foundation Architect's fee for building and land improvements (10% land improvement) Cost of building construction Cost of sidewalks Cost of parking lots Cost of lighting for grounds Cost of landscaping Cost of machinery Freight-in, equipment Cost of installing equipment Cost of testing equipment Cost of repairing building that was damaged in the installation of equipment Cost of medical bill for injury reccived by employee while installing equipment $1,000,000 2,500 570 9,800 2,030 21,000 1,590 11,400 33,300 520,000 13,600 47,540 52,260 10,200 749,000 34,400 76,200 13,800 8,990 3,420 10.500 Cost of open house party to celebrate Account balance $1,722,100 The timber that was cleared from the land was sold to a firewood dealer for $2,400. This amount n Sale. During the construction period, two supervisors devoted their full time to s credited to Gain o the construction project. They earn annual salaries of $44,000 and $52,000, respectively. They spent two nths on the purchase and preparation of the land, five months on the construction of the building (approximately one-fifth of which was devoted to improvements on the grounds), and one month on quipment installation. The plant began operation on September 1, and the supervisors returned to their regular duties. Their salaries were debited to Factory Salaries Expense Instructions . Utilizing Excel, prepare a spreadsheet with the following column headings: Items, Land d Improvements, Buildings, Equipment, and Other Accounts. For any amounts entered e Other Accounts column, also indicate the account title. Briefly list the items under th column titled "Items" and place each in the proper account. [Example: the third item could be shortened to "Title transfer."] Negative amounts should be shown in parentheses. Total the columns From your spreadsheet totals, prepare a journal entry to transfer the balance in the "Tangible and other accounts into the correct accounts

Explanation / Answer

Journal Entry:

(1) Land A/c Dr 1,14,900

Land Improvement A/c Dr 21,000

Building A/c Dr. 6,36,040

Equipment A/c Dr 9,25,660

Cost of Grading (Profit &Loss A/c) Dr 1,590

Repair of Building (Profit &Loss A/c) Dr 8,990

Cost of Labour Welfare (Profit &Loss A/c) Dr 3,420

Office Expenses (Profit &Loss A/c) Dr 10,500

To Tangible A/c 17,22,100

(2) Land A/c Dr. 16,000

Building A/c Dr. 40,000

Equipment A/c Dr. 8,000

To Salaries 64,000

Items Land Land Improvement Buildings Equipments Other Accounts cost of Land     1,00,000.00 Surveying Cost           2,500.00 Transfer of title              570.00 Broker's Fee           9,800.00 Attorney's Fee           2,030.00 Cost of removing Timber         21,000.00 Cost of grading Land     1,590.00 Cost of Digging      11,400.00 Architect Fee      33,300.00 Cost of Building Construction 5,20,000.00 Cost of Sidewalk      13,600.00 Cost of Parking lot      47,540.00 Cost of lighting for grounds      52,260.00 cost of landscaping      10,200.00 cost of machinery 7,49,000.00 freight in      34,400.00 cost of installation      76,200.00 cost of testing equipment      13,800.00 cost of repairing building     8,990.00 cost of medical bill     3,420.00 cost of open house party 10,500.00 Totals     1,14,900.00         21,000.00 6,36,040.00 9,25,660.00 24,500.00

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