The Mawn Company bought land and built a warehouse during 2007. It debited the following related costs to an account titled Land and Buildings:Land purchase …………………. $22,000Demolition of old building …………….. 3,000Legal fees for land acquisition …………….. 1,500Interest on loan for construction (based on average costs incurred) .. 2,900Building construction ………………. 53,000Assessment by city for sewer connection ………… 1,200Landscaping …………………… 3,500Equipment purchased for excavation …………. 18,800Fixed overhead charged to building …………… 15,000Insurance on building during construction ……….. 1,000Profit on construction ………………. 12,000Compensation for injury to construction worker ……… 3,000Modifications to building ordered by building inspectors …… 7,500Property taxes on land paid in 2007 ………….. 2,500 The following credits were made to the account:Salvage from demolished old building …………… $ 700Sale of excavation equipment …………….. 14,000In addition, you discover that compensation for the worker’s injury was necessary because it was not covered by the particular insurance policy purchased by the company. Accident insurance that would have covered the injury would have cost an additional $350. The modifications ordered by the building inspectors resulted from poor planning by the company.RequiredPrepare adjusting entries on December 31, 2007 to properly reclassify the preceding items.View Solution:
The Mawn Company bought land and built a warehouse during



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