Fixed Assets and Journal Entries

Jackson Company was incorporated on Jan 2 of the current year but did not begin operations until Aug 1 this year. The Land and Building account as of the end of the current fiscal year appears below:

1/31 Land and old building on land $200,000
2/28 Cost of removal of old building $5,000
4/1 Legal fees $6,000
5/1 Fire insurance premium payments $7,200
5/1 Special tax assessments for streets $5,500
5/1 Partial payment for construction of new building $80,000
8/1 Final Payment on building construction $80,000
8/1 General expenses $30,000
12/31 Asset write up to fair market value $150,000

Additional Information:

1. To acquire the land and building on Jan 31, the company paid $100,000 cash and issued 1,000 shares of its common stock. The stock had a par value of $100 per share and a fair market value of $205 per share.

2. Jackson paid Terem Down Destruction Company $5,000 to tear down the old building. It then sold some of the salvaged material for $2,000.

3. Legal fees covered the following:
Cost of organization $2,000
Examination of title to the land $2,500
Legal work in connection with building $1,500

4. The fire insurance premium covered a three-year premium beginning on May 1 of the current year.

5. General expenses covered the following for the period of Jan 2 to Aug 1:
President and CEO's salary $20,000
Supervisor and Construction salary $10,000

6. Because the building was thought to have increased in value, the cost of the building was increased by $150,000.

Using the above information, place the proper amounts into the following proper T account.

Land Building

Solution Summary

This solution looks at fixes assets and journal entries into the land and building accounts.