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On July 1, 2011 Jekel Hide Inc. purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic...
On July 1, 2011 Jekel & Hide 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: 185,000Title insurance: 1,500Legal fees to purchase land: 1,000Cost of razing old building on lot: 8,500Proceeds form sale of salvageable materials: (1,200)Property Taxes, January 1,2011 - June 30,2011: 3,000Cost of grading and filling building site: 9,000Cost of building construction : 620,000INterest on construction loan; 12,000Cost of construction driveway; 8,000Cost of parking lot and fencing: 12,000Requirement:Please help me to 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.
SOLUTION:PARTICULARSPurchase PriceTitle insuranceLegal fees to purchase landCost of razing old building on lotProceeds form sale of salvageable materialsProperty Taxes, January 1,2011 - June...