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:
|1/31/14||Land and dilapidated building||$200,000|
|2/28/14||Cost of removing building||4,040|
|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|
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.
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:
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.
|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.
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