Property, Plant And Equipment Paper Homework Help

 
JoJo’s, Inc. is opening a new fast-food location on the outskirts of town. The company policy is to depreciate land improvements over 20 years, buildings over 40 years, and all furniture and equipment over 8 years, all on a straight-line basis using a mid-month convention with no residual value.



Instructions




Determine the total cost of each asset.
All construction was completed on October 31. Prepare the year-end journal entry to record depreciation expense assuming no depreciation has been recorded yet.




Part 1







 
 
Land
Land Improvements
Equipment
Buildings
Checksum


Purchase price of three acres of land
$85,000
 
 
 
 
$85,000


Delinquent real estate taxes on the land to be paid by JoJo’s, Inc.
5,500
 
 
 
 
$5,500


Additional dirt and earthmoving
8,300
 
 
 
 
$8,300


Title insurance on the land acquisition
3,400
 
 
 
 
$3,400


Fence around the boundary of the property
9,400
 
 
 
 
$9,400


Building permit for the building
1,200
 
 
 
 
$1,200


Architect’s fee for the design of the building
20,600
 
 
 
 
$20,600


Signs near the front of the property
9,200
 
 
 
 
$9,200


Materials used to construct the building
241,000
 
 
 
 
$241,000


Labor to construct the building
172,000
 
 
 
 
$172,000


Interest cost on construction loan for the building
13,200
 
 
 
 
$13,200


Parking lots on the property
28,800
 
 
 
 
$28,800


Lights for the parking lots
10,600
 
 
 
 
$10,600


Salary of construction supervisor (80% to building; 20% to parking lot and concrete walks)
40,000
 
 
 
 
$40,000


Furniture and equipment
110,000
 
 
 
 
$110,000


Transportation of furniture and equipment from seller to the building
5,200
 
 
 
 
$5,200


Additional fencing
6,000
 
 
 
 
$6,000


TOTAL PROJECT COSTS
$769,400
$0
$0
$0
$0
$769,400







Part 2







 
 
JOURNAL
 
 
Page 101


 
 
 
 
 
 


DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT


20–
 
 
 
 
 


Dec
31
Depreciation Expense – Land Improvements
 
 
 


 
 
Depreciation Expense – Equipment
 
 
 


 
 
Depreciation Expense – Building
 
 
 


 
 
Accumulated Depreciation
 
 
 


 
 
To record partial year depreciation on new assets