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 |
|
$ |