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    Journal entries and schedule

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    During the past year, a company completed the following transactions related to the acquisition of property and the construction thereon of a new factory:

    A. Paid $200,000 to landscape the property. The landscaping is considered permanent in nature.

    B. Paid $70,000 to have an old building removed from the property.

    C. Paid $240,000 commission to the commercial real estate agency in payment for services provided related to the acquisition of the property.

    D. Purchased factory machinery for $16,000,000.

    E. Purchased a tract of land for $12,000,000. The land was larger than needed but the seller would not break up the parcel. The company intends to use 2/3 of the property for the new factory site and retain the remainder as an investment.

    F. Paid an architect firm $250,000 to design the new factory building.

    G. Received $5,000 in salvage from the materials removed from the old building that was removed from the property.

    H. Paid $17,000 for building permits for the new factory.

    I. Paid $200,000 to have the land excavated according to the architect's plans in preparation for the factory building foundation to be poured.

    J. Paid $28,000,000 to a contractor for the construction of the new factory building.

    K. Paid $950,000 to have the factory machinery installed.

    L. Paid $45,000 in back property taxes owed by a previous owner, now deceased.

    M. Paid $150,000 to have the portion of the land to be used for the factory cleared and graded to level. The portion of the land held for investment was left heavily wooded.

    N. Per an agreement with the local government, paid $400,000 to have a public road extended to the factory site.

    O. Paid $73,000 for freight charges on the factory machinery.

    P. Paid a law firm $30,000 for services related to perfecting the title on the land purchase.

    Q. Paid $300,000 for the construction of driveways and parking lots on the property to service the factory building.

    R. Borrowed $35,000,000 to pay for a portion of the property.


    Ignoring any impact of interest:

    1) Prepare the necessary journal entries to record the above transactions. Assume that all transactions were paid with cash.

    2) Prepare schedules computing the amount, by each appropriate account title, to be shown on the balance sheet under the plant, property, and equipment section of assets. Ignore depreciation.

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    Solution Summary

    The solution explains the journal entries and related schedules for the given transactions