All construction was complete and the assets were placed in service on July 1. R

ID: 2580537 • Letter: A

Question

All construction was complete and the assets were placed in service on July 1. Record partial-year depreciation for the year ended December 31 (Record a single compound journal entry. Round all depreciation expense amounts to the nearest whole dollar. Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

$86,000 Purchase price of three acres of land Delinquent real estate taxes on the land to be paid by Perfect Parking a. b. c. Additional dirt and earthmoving d. Title insurance on the land acquisition e. Fence around the boundary of the property f. Building permit for the building g. Architect's fee for the design of the building h. Signs near the front of the property i. Materials used to construct the building 6,200 8,100 3,400 9,300 1,100 20,400 9,500 217,000 172,000 9,900 29,700 Labor to construct the building k. Interest cost on construction loan for the building I. Parking lots on the property

Explanation / Answer

Note: Since Depreciation rate is not provided, I am hereby taking 10% as depreciation rate hypothetically to explain and solve the sum:

Cost of Property:

PARTICULARS

AMOUNT IN $

Purchase price of land

86000

Add:

Tax

6200

Additional dirt and earthmoving

8100

Insurance

3400

Fence

9300

Building permit

1100

Architect’s fee

20400

Signs near property

9500

Material used

217000

Labour

172000

Interest cost

9900

Parking cost

29700

Lights

10200

Salary of supervisor

80000

Furniture

11900

Transportation cost of furniture

2000

Additional fencing

6900

TOTAL

683600

JOURNAL ENTRIES

DATE

PARTICULARS

DEBIT

CREDIT

July 1

Property A/c

683600

To Cash A/c