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Week 1 E9-3

In: Business and Management

Submitted By sayrasmommy
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Determine property, plant, and equipment costs
E9-2 Trudy Company incurred the following costs. Debit Account
1. Sales tax on factory machinery purchased $5,000.00 Equipment
2. Painting of and lettering on truck immediately upon purchase $700.00 Equipment
3. Installation and testing of factory machinery $200.00 Equipment
4. Real estate broker’s commission on land purchased $3,500.00 Land
5. Insurance premium paid for first year’s insurance on new truck $880.00 Equipment
6. Cost of landscaping on property purchased $720.00 Land Imporvements
7. Cost of paving parking lot for new building constructed $17,900.00 Land Imporvements
8. Cost of clearing, draining, and filling land $13,300.00 Land Imporvements
9. Architect’s fees on self-constructed building $10,000.00 Buildings Instructions:
Indicate to which account Trudy would debit each of the costs.
Land - The cost of land includes (1) the cash purchase price, (2) closing costs such as title and attorney’s fees, (3) real estate brokers’ commissions, and (4) accrued property taxes and other liens assumed by the purchaser.
Land Imporvements - are structural additions made to land.
Buildings - all necessary expenditures related to the purchase or construction of a building.
"Equipment - store check-out counters, office furniture, factory machinery, delivery trucks, and airplanes.The cost of equipment, such as Rent-A-Wreck vehicles, consists of the cash purchase price, sales taxes, freight charges, and insurance during transit paid by the purchaser. It also includes expenditures required in assembling, installing, and testing the...

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