Question - On July 1, 2011 Jekel & Hide Inc. purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below:
Purchase price: 185,000
Title insurance: 1,500
Legal fees to purchase land: 1,000
Cost of razing old building on lot: 8,500
Proceeds form sale of salvageable materials: (1,200)
Property Taxes, January 1,2011 - June 30,2011: 3,000
Cost of grading and filling building site: 9,000
Cost of building construction : 620,000
INterest on construction loan; 12,000
Cost of construction driveway; 8,000
Cost of parking lot and fencing: 12,000
Requirement: Please help me to indicate the accounts that would be affected by the above transactions and the resulting balance in each account. Apply the interest on the construction loan to the cost of the building only.