Answer:
Journalize transactions for the following:
a. Purchase of the land
Dr Land 485,000
Cr Cash 485,000
b. All the costs chargeable to the building in a single entry
Dr Building 735,020
Cr Cash 735,020
The building accounts includes the $690,000 (construction costs) + $28,300 (capitalized interests) + $1,400 (building permit) + $15,320 (architect's fees).
c. Depreciation on the building for 2016 Explanations are not required.
Dr Depreciation expense 5,686
Cr Accumulated depreciation 5,686
Only the building is depreciated, land is not. Depreciation expense per year = ($735,020 - $337,000) x 1/35 = $11,372. Since Chun can only depreciate half a year, the depreciation expense will be $5,686.
Report Chun's Book Store's plant assets on the company's balance sheet at December 31, 2016.
Land $485,000
Building $729,334
What will Chun's income statement for the year ended December 31, 2016, report for these facts?
nothing, since interests were capitalized
