Problem - Presented below is information related to Rommel Company.
1. On July 6 Rommel Company acquired the plant assets of Studebaker Company, which had discontinued operations. The appraised value of the property is:
Land $400,000
Building 1,200,000
Machinery and equipment
800,000
Total
$2,400,000
Rommel Company gave 12,500 shares of its $100 par value common stock in exchange. The stock had a market value of $180 per share on the date of the purchase of the property.
2. Rommel Company expended the following amounts in cash between July 6 and December 15, the date when it first occupied the building.
Repairs to building $105,000
Construction of bases for machinery to be installed later 135,000
Driveways and parking lots 122,000
Remodeling of office space in building, including new partitions and walls 161,000
Special assessment by city on land 18,000
3. On December 20, the company paid cash for machinery, $280,000, subject to a 2% cash discount, and freight on machinery of $10,500.
Prepare entries on the books of Rommel Company for these transactions.