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Mawn Company bought land and built a warehouse during 2013 It improperly debited the following related costs to an account titled Land and Buildings Land purchase


Mawn Company bought land and built a warehouse during 2013. It improperly debited the following related costs to an account titled Land and Buildings:

Land purchase …………………………………………………………………….$22,000

Demolition of old building ………………………………………………………….3,000

Legal fees for land acquisition ………………………………………………………1,500

Avoidable interest on loan for construction …………………………………………2,900

Building construction ………………………………………………………………53,000

Assessment by city for sewer connection – city is responsible for maintenance ……1,200

Landscaping (expected to be permanent in nature) …………………………………3,500

Equipment purchased for excavation ……………………………………………..18,800

Pro rata portion of fixed overhead incurred during construction of building …….15,000

Insurance on building during construction …………………………………………1,000

Profit on construction ……………………………………………………………..12,000

Compensation for injury to construction worker (not covered by the insurance policy purchased by Mawn) 3,000

Modifications to building ordered by building inspectors (due to poor planning by Mawn) 7,500

Deliquent property taxes on land paid in 2013 (land was purchased during the year) 2,500

Required:

Prepare adjusting entries on December 31, 2013, to properly reclassify the preceding items.

Apr 01 2020 View more View Less

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