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Park and FlyPark and Fly,

near an airport, incurred the following costs to acquire land, make land improvements, and construct and furnish a small building:

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a.

Purchase price of three acres of land

$85,000

b.

Delinquent real estate taxes on the land to be paid by

Park and Fly

5,500

c.

Additional dirt and earthmoving

8,300

d.

Title insurance on the land acquisition

3,400

e.

Fence around the boundary of the property

9,400

f.

Building permit for the building

1,200

g.

Architects fee for the design of the building

20,600

h.

Signs near the front of the property

9,700

i.

Materials used to construct the building

211,000

j.

Labor to construct the building

172,000

k.

Interest cost on construction loan for the building

9,300

l.

Parking lots on the property

28,800

m.

Lights for the parking lots

10,600

n.

Salary of construction supervisor (80% to building; 20%

to parking lot and concrete walks)

40,000

o.

Furniture

11,600

p.

Transportation of furniture from seller to the building

2,000

q.

Additional fencing

6,000

Park and Fly

depreciates land improvements over

20

years, buildings over

40

years, and furniture over

8

years, all on a straight-line basis with zero residual value.

Requirements

1.	Show how to account for each cost by listing the cost under the correct account. Determine the total cost of each asset.
2.	All construction was complete and the assets were placed in service on October 1. Record partial-year depreciation for the year ended December 31.

Requirement 1. Show how to account for each cost by listing the cost under the correct account. Determine the total cost of each asset.

Begin by listing each cost for items a. through i. first, followed by items j. through q. Then determine the total cost of each asset. (Leave any unused cells blank.)

				Land
Item			Land	Improvements			Building		Furniture
a.
b.
c.
d.
e.
f.
g.
h.
i.

j.
k.
l.
m.
n.
o.
p.
q.

Totals

Requirement 2. All construction was complete and the assets were placed in service on

October

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.)

Date			Accounts and Explanation	Debit	Credit

Answer & Explanation Solved by verified expert

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