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Gibbs Manufacturing Co was incorporated on 1/2/14 but was unable to begin manufacturing activities until 8/1/14 because new factory facilities were not completed until that date The Land and

Gibbs Manufacturing Co. was incorporated on 1/2/14 but was unable to begin manufacturing activities until 8/1/14 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/14 per the books was as follows:

Date     Item   Amount
1/31/14   Land and dilapidated building   $200,000
2/28/14   Cost of removing building   4,040
4/01/14   Legal fees   6,040
5/01/14   Fire insurance premium payment   5,436
5/01/14   Special tax assessment for streets   4,620
5/01/14   Partial payment of new building construction   188,900
8/01/14   Final payment on building construction   188,900
8/01/14   General expenses   30,700
12/31/14   Asset write-up   74,000
        $702,636


Additional information:

1.  

To acquire the land and building on 1/31/14, the company paid $100,000 cash and 1,000 shares of its common stock (par value = $100/share) which is very actively traded and had a fair value per share of $160.

2.  

When the old building was removed, Gibbs paid Kwik Demolition Co. $4,040, but also received $1,580 from the sale of salvaged material.

3.   Legal fees covered the following:
Cost of organization   $2,520
Examination of title covering purchase of land   1,820
Legal work in connection with the building construction   1,700
   

$6,040

4.  

The fire insurance premium covered premiums for a three-year term beginning May 1, 2014.

5.   General expenses covered the following for the period 1/2/14 to 8/1/14.
President's salary   $19,700
Plant superintendent covering supervision of new building   11,000
    $30,700
6.   Because of the rising land costs, the president was sure that the land was worth at least $74,000 more than what it cost the company.


Determine the proper balances as of 12/31/14 for a separate land account and a separate buildings account.

Land   $
Buildings   $

Jun 23 2020 View more View Less

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