- •108. On July 1, 2006, Jekel & Hyde Inc. Purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below:
- •Required:
- •Indicate the accounts that would be affected by the above transactions and the resulting balance in each account. Apply the interest on the construction loan to the cost of the building only.
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •In its 2004 annual report to shareholders, Boston Beer Co. Disclosed the following footnote:
- •E. Property, Plant and Equipment
- •128. Use a t- account to show the balances and changes during 2004 in Boston Beer's: Property, Plant and Equipment account and its Accumulated depreciation—Property, Plant & equipment account.
- •Required:
- •130. Use a t- account to show the balances and changes during 2004 in Plank Breweries:
- •Note 4 Property, Plant and Equipment
- •100. A summary of Klugman Company's December 31, 2006, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:
- •101. A summary of London Fashion's December 31, 2006, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:
- •114. Is there any evidence in Winchester's disclosures above that are consistent with earnings management?
- •Required:
- •121. Is there any evidence in hp's disclosures above that are consistent with earnings management?
- •100. Required:
- •101. Required:
- •104. Required:
- •105. Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •127. In its 2004 annual report to shareholders, Martin Marietta Materials, Inc. Included the following in its financial statement footnotes:
- •Note e: property, plant and equipment, net
- •In another footnote, the company reported:
108. On July 1, 2006, Jekel & Hyde Inc. Purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below:
|
Purchase price |
$185,000 |
|
|
Title insurance |
$1,500 |
|
|
Legal fees to purchase land |
$1,000 |
|
|
Cost of razing old building on lot |
8,500 |
|
|
Proceeds from sale of salvageable materials |
(1,200 |
) |
|
Property taxes, January 1, 2006 - June 30, 2006 |
3,000 |
|
|
Cost of grading and filling building site |
9,000 |
|
|
Cost of building construction |
620,000 |
|
|
Interest on construction loan |
12,000 |
|
|
Cost of constructing driveway |
8,000 |
|
|
Cost of parking lot and fencing |
12,000 |
|
Required:
Indicate the accounts that would be affected by the above transactions and the resulting balance in each account. Apply the interest on the construction loan to the cost of the building only.
Answer:
|
Land: |
|
|
|
|
Purchase price |
|
|
$185,000 |
|
Title insurance |
|
|
1,500 |
|
Legal fees |
|
|
1,000 |
|
Cost of razing old building |
$8,500 |
|
|
|
Proceeds from sale of salvaged materials |
(1,200 |
) |
7,300 |
|
Property tax prior to 6/30 |
|
|
3,000 |
|
Cost of grading and filling building site |
|
|
9,000 |
|
Total |
|
|
$206,800 |
|
|
|
|
|
|
Building: |
|
|
|
|
Cost of building construction |
|
|
$620,000 |
|
Interest on construction loan |
|
|
12,000 |
|
Total |
|
|
$632,000 |
|
|
|
|
|
|
Land improvements: |
|
|
|
|
Driveway |
|
|
$ 8,000 |
|
Parking lot and fencing |
|
|
12,000 |
|
Total |
|
|
$20,000 |
|
|
|
|
|
Learning Objective: 1 Level of Learning: 3
109. Mad Hatter Enterprises purchased new equipment for $365,000, FOB shipping point. Other costs connected with the purchase were as follows:
|
State sales tax |
29,200 |
|
Freight costs |
5,600 |
|
Insurance while in transit |
800 |
|
Insurance after equipment placed in service |
1,200 |
|
Installation costs |
2,000 |
|
Testing, including $300 of spoilage |
700 |