Accounting

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 3,900
4/01/14 Legal fees 6,190
5/01/14 Fire insurance premium payment 5,112
5/01/14 Special tax assessment for streets 4,780
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 30,800
12/31/14 Asset write-up 74,000
$702,582

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. $3,900, but also received $1,460 from the sale of salvaged material.
3. Legal fees covered the following:

Cost of organization $2,600
Examination of title covering purchase of land 2,190
Legal work in connection with the building construction 1,400
$6,190
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 $20,700
Plant superintendent covering supervision of new building 10,100
$30,800
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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