Peach Company has the following entries in its Building account:
|
2009 |
Debits |
|
|
May 5 |
Cost of land and building purchased |
$200,000 |
|
5 |
Broker fees incident to purchase of land and building |
12,000 |
|
2010 |
||
|
Jan. 3 |
Contract price of new wing added to south end |
84,000 |
|
15 |
Cost of new machinery, estimated life 10 years |
160,000 |
|
June 10 |
Real estate taxes for six months ended 2010/6/30 |
3,600 |
|
Aug. 10 |
Cost of building parking lot for employees in back of building |
4,960 |
|
Sept. 6 |
Replacement of windows broken in August |
160 |
|
Oct. 10 |
Repairs due to regular usage |
2,240 |
|
Credits |
||
|
2009 |
||
|
May 24 |
Transfer to Land account, per allocation of purchase cost authorized in minutes of board of directors |
32,000 |
|
2010 |
||
|
Jan. 5 |
Proceeds from leases of second floor for six months ended 12/31/09 |
8,000 |
Peach acquired the original property on 2009 May 5. Orange immediately engaged a contractor to construct a new wing on the south end of the building. While the new wing was being constructed, the company leased the second floor as temporary warehouse space to Kellett Company. During this period (July 1 to 2009 December 31), the company installed new machinery costing USD 160,000 on the first floor of the building. Regular operations began on 2010 January 2.
a. Compute the correct balance for the Buildings account as of 2010 December 31. The company employs a calendar-year accounting period.
b. Prepare the necessary journal entries to correct the records of Peach Company at 2010 December 31. No depreciation entries are required.