Fundamental Accounting Principles Volume 2 17th Edition By Kermit D. Larson test bank

June 5
Paid $750 to replace garage windows broken during a hail storm.

Aug 23
Purchase used office equipment for $13,500 plus provincial sales tax of $945 terms 2/10, n 30 from Great West Office Supplies. As well, Salem paid freight of $300 and reconditioning cost of $850 on credit. Estimated useful life of 4 years and a residual value of $1,000.

Sept 12
Paid for office equipment purchased on August 23’d.

Oct 5
Purchased store equipment for $28,000 plus $1,960 in provincial sales tax. As well, Salem paid $1,750 for repairs incurred from an accident during installation. $5,200 for a special base for the equipment and $3,700 of supplies to be used for regular preventive maintenance. Estimated useful life is 9 years and residual value is $1,300.












74)  Shady Lanes installed automatic sprinkler systems. The electrical work for the installation was $24,000. The invoice price of the sprinkler equipment was $280,000. Additional costs were $5,000 for delivery and $800 for insurance during transportation. During installation a sprinkler line was punctured and was replaced for $200. What is the cost of the sprinkler equipment?













75)  Timing Investments purchased land with a building for a total cost of $6,000,000 ($500,000 paid in cash and the balance on a long-term note). The appraised cost of the land and building were $3,510,000 and $1,890,000, respectively. Calculate the costs to be allocated to the land and the building and prepare the appropriate journal entry to record the acquisition.













76)  Honey Crisp Co needed a new building, and found a suitable piece of land which had an old building on it. Honey Crisp made an agreement to buy the land and the building for $860,000 cash. The old building was demolished to make way for the new building. The following is information regarding the demolishing of the old building and construction of the new one:



Cost of construction of new building, including $600,000 for a parking lot
5,260,000

Demolition of old building
150,000

Proceeds from salvage materials
20,000


 Prepare a single journal entry to record the above cost (assume paid cash).













77)  Prime Co paid $200,000 to purchase a piece of land on which to build a new building. Additional costs incurred were:



Real estate broker’s commissions
$10,800

Legal fees of purchasing the real estate
1,400

Landscaping expenses
6,000

Expense to demolish old house located on land
1,500

Proceeds from selling materials salvaged from old house
900


 What dollar amount of the above costs should be allocated to Land and what amount should be allocated to the new Building?













78)  ACS Company made the following expenditures in connection with the construction of its new cross fit facility:



Architect’s fees
9,000

Cash paid for land and old building
140,000

Removal of old building
20,000

Survey to site the new building
(8,000)

Legal fees for title search
1,000

Excavation for construction of basement
2,500

Machinery purchased
72,000

Storage charges on machinery because building was not ready when machinery was delivered
600

Freight on machinery purchased
2,000

Hauling charges to deliver machinery from storage to new building
800

Construction costs of new building
615,000

Landscaping
7,050

Installation of machinery
9,000


 Prepare a schedule showing the amounts to be recorded as Land, Building, and Machinery and Equipment and Expenses.













79)  How is the cost principle applied to property, plant and equipment?













80)  RoboCop Company paid $31,400 for a machine that was expected to last 5 years and have a residual value of $5,000. During the third year of the machine's life, $3,700 was paid for replacement parts that were expected to increase the machine's productivity by 20% each year. Prepare the general journal entry to record this transaction.













81)  RoboCop Company paid $31,400 for a machine that was expected to last 5 years and have a residual value of $5,000. During the fourth year of the machine's life, $5,400 was paid for repairs that were expected to increase the service life of the machine from 5 to 7 years. Prepare the general journal entry to record this transaction.