Acquisition of Land and Construction of Plant
Bylund Corporation was organized in June 2008. In auditing its books, you find the following land, buildings, and equipment account:
Account: LAND, BUILDINGS, AND EQUIPMENT
|
Date |
Item |
Debit |
Credit |
Balance |
||
|
Debit |
Credit |
|||||
|
2008 |
|
|
|
|
|
|
|
June |
8 |
Organization fees paid to the state |
21,000 |
|
21,000 |
|
|
|
16 |
Land site and old building |
325,000 |
|
346,000 |
|
|
|
30 |
Corporate organization costs |
40,000 |
|
386,000 |
|
|
July |
2 |
Title clearance fees |
15,300 |
|
401,300 |
|
|
Aug. |
28 |
Cost of razing old building |
15,000 |
|
416,300 |
|
|
Sept. |
1 |
Salaries of Bylund Corporation executives |
100,000 |
|
516,300 |
|
|
|
1 |
Cost to acquire patent for special equipment |
54,000 |
|
570,300 |
|
|
Dec. |
12 |
Stock bonus to corporate promoters, 3,000 shares |
|
|
|
|
|
|
|
of common stock, $50/share market value |
150,000 |
|
720,300 |
|
|
|
15 |
County real estate tax |
13,200 |
|
733,500 |
|
|
|
15 |
Cost of new building completed and occupied |
|
|
|
|
|
|
|
on this date |
1,450,000 |
|
2,183,500 |
|
An analysis of this account and of other accounts disclosed the following additional information:
(a) The building acquired on June 16, 2008,was valued at $41,000.
(b) The corporation paid $15,000 for the demolition of the old building and then sold the scrap for $7,000 and credited the proceeds to Miscellaneous Revenue.
(c) The corporation executives did not participate in the construction of the new building.
(d) The county real estate tax was for the 6 month period ended December 31, 2008, and was assessed by the county on the land.
Instructions: Prepare journal entries to correct Bylund Corporation’s books.