Complete the Journal entries for 12/31/2018
In June of 2018 Bill buys a piece of land with an old building on it. Bill knocks down the old building and builds another bakery with a café and a small warehouse.He also put in a parking lot.The cost of the land was $100,000.He paid $3000 in delinquent real estate taxes and $7000 in attorney’s fees at the closing.The cost to knock down the old building and clear the land was $16,000, but he was able to sell the scrap bricks and lumber for $6,000.The cost to construct the new building was $140,000 and he paid $10,000 to have the parking lot paved and have lights and a fence put up.After the building was completed Bill had an alarm system installed for $2000.Bill purchased furniture and fixtures for $4,000 and was able to buy an oven, refrigerator-freezer and dishwasher for special bundle price of $34,000.The actual fair market values and life and salvage value are listed below: Actual Use
Est LifeSalvValueEstUsefulHrs Yr 1 Yr 2 Oven………………….…..$14,000 5 yrs$2,0004,000 3001,000
Refrigerator-Freezer…..….$20,000 4 yrs $4,0008,000 1,200 2,400
Dishwasher……………….$6,0003 yrs$1,0002,000400 800
Bill financed the purchase of the land, construction of the building and equipment by taking out a 15 year mortgage for $250,000 at a rate of 6%.
Bill is also ready to replace the equipment at his other location, but is undecided about whether he should buy or lease the equipment.Bill has a friend who is willing to buy the equipment for $7,000.
Required:
- Record journal entries for the transactions associated with the mortgage issued on 06/01/18 and the purchase of the land (07/01/18), building, equipment, parking lot, and furniture and fixtures (10/1/18)
- Prepare an amortization schedules for the payments on the small business loan and the mortgage
- Record the payments on the $60,000 loan for the year (may be done as a summary entry) and the first 6 months of mortgage payments (adjust for interest which should be capitalized during construction of building (7/1/18-9/30/18) and accrued interest on 12/31/18
- Prepare depreciation schedules for the new assets using straight-line depreciation. Also prepare depreciation schedules using an accelerated and activity based method for he kitchen equipment only.
- Record journal entries for the depreciation on the old and the equipment using the results of your straight line calculations.
- Record the sale of the old equipment on 12/31/18
- Record $700,000 of cash Sales earned and $650,000 operating expenses paid from March to December and close to Retained Earnings along with any other revenue and expenses recorded in your entries.
Assume a 5 year life for the furniture and fixtures with no salvage value and the building has a life of 25 years and a salvage value of $50,000. You will have to look up the depreciable life for the parking lot.
Use the excel that i gave u, just complete the journal entries for 12/31/2018
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Complete the Journal entries for 12/31/2018 was first posted on February 25, 2021 at 1:50 pm.
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