Question Details

The cost of the land that should be recorded by Wilson Co. is



Use the following information for questions 1 and 2.

Wilson Co. purchased land as a factory site for $600,000. Wilson paid $60,000 to tear down two buildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Architect's fees were $31,200. Title insurance cost $2,400, and liability insurance during construction cost $2,600. Excavation cost $10,440. The contractor was paid $2,200,000. An assessment made by the city for pavement was $6,400. Interest costs during construction were $170,000.

	1.	The cost of the land that should be recorded by Wilson Co. is
a.	$660,480.
b.	$666,880.
c.	$669,880.
d.	$676,280.

	2.	The cost of the building that should be recorded by Wilson Co. is
a.	$2,403,800.
b.	$2,404,840.
c.	$2,413,200.
d.	$2,414,240.

	3.	On February 1, 2010, Nelson Corporation purchased a parcel of land as a factory site for $200,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2010. Costs incurred during this period are listed below:
Demolition of old building	$     20,000
Architect's fees	35,000
Legal fees for title investigation and purchase contract	5,000
Construction costs	1,090,000
(Salvaged materials resulting from demolition were sold for $10,000.)
Nelson should record the cost of the land and new building, respectively, as
a.	$225,000 and $1,115,000.
b.	$210,000 and $1,130,000.
c.	$210,000 and $1,125,000.
d.	$215,000 and $1,125,000.

	4.	Worthington Chandler Company purchased equipment for $10,000. Sales tax on the purchase was $500. Other costs incurred were freight charges of $200, repairs of $350 for damage during installation, and installation costs of $225. What is the cost of the equipment?
a.	$10,000
b.	$10,500
c.	$10,925
d.	$11,275

	5.	Fogelberg Company purchased equipment for $12,000. Sales tax on the purchase was $600. Other costs incurred were freight charges of $240, repairs of $420 for damage during installation, and installation costs of $270. What is the cost of the equipment?
a.	$12,000. 
b.	$12,600.
c.	$13,110.
d.	$13,530.



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