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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 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. |
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| 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. |
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| 3. | Legal fees covered the following:
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| 4. |
The fire insurance premium covered premiums for a three-year term beginning May 1, 2014. |
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| 5. | General expenses covered the following for the period 1/2/14 to 8/1/14.
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| 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 | $ |
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