Accounting for Construction Costs and Equipment Purchases | ACCT

School: University of Wisconsin, River Falls - Course: ACCT 321 - Subject: Accounting

ACCT 321 HW 10 Bryanna Zillmer Exercise 1 ItemLandLandimprovementsBuildingsOther Accounts a)Money borrowed to pay buildingcontractor (signed note) $ - 275,000 b)Payment for construction fromnote proceeds $ + 275,000 c)Cost of land fill and clearing$ + 8,000 d)Delinquent real estate taxes onproperty assumed by purchaser + 7,000 e)Premium on 6-month insurancepolicy during construction + 6,000 f)Refund of 1-month insurancepremium because construction completed early -1,000 g)Architect's fee on building+ 22,000 h)Cost on real estate purchased asa plant site (land $200,000 and building $56,930) + 250,000 i)Commission fee paid to realestate agency + 9,000 j)Installation of fences aroundproperty $ + 4,000 k)Cost of razing and removingbuilding + 11,000 l)Proceeds from salvage ofdemolished building -5,000 m)Interest paid during constructionon money borrowed for construction + 13,000 n)Cost of parking lots anddriveways + 19,000 o)Cost of trees and shrubberyplanted (permanent in nature) + 14,000 p)Excavation costs for new building+ 3,000

4 Purchase: Cash paid for equipment, including sales tax$ 105,000 Freight and insurance cost while in transition2,000 Cost of moving equipment into place at factory3,100 Wage cost for technicians to test equipment4,000 Insurance premium paid during the first year of operation on this equipment0 Special Plumbing fixtures required for new equipment8,000 Repair cost incurred in the first year of operations related to this equipment0 Total cost purchased equipment$ 122,100 Construction: Material and purchased parts$ 200,000 Imputed interest on funds during construction (stock financing)14,000 Labor costs190,000 Allocated overhead costs50,000 Profit on self-construction0 Cost of installing equipment4,400 Total cost constructed equipment$ 458,400