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12 January, 13:13

During 2018 , Lee's Book Store paid $ 273 comma 000 for land and built a store in Columbus comma Ohio. Prior to construction, the city of Columbus charged Lee's $ 1 comma 300 for a building permit, which Lee's paid. Lee's also paid $ 15 comma 300 for architect's fees. The construction cost of $ 685 comma 000 was financed by a long-term note payable, with interest costs of $ 28 comma 220 paid at the completion of the project. The building was completed June 30, 2018. Lee's depreciates the building using the straight-line method over 35 years, with estimated residual value of $ 336 comma 000Journalize transactions for the following: a. Purchase of the land b. All the costs chargeable to the building in a single entry c. Depreciation on the building for 2016

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  1. 12 January, 14:13
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    The journal entries are shown below:

    1. Land A/c Dr $273,000

    To Cash A/c $273,000

    (Being land is purchased for cash)

    2. Building A/c Dr $729,820

    To Notes Payable $685,000

    To Cash $44,820

    (Being all cost are recorded)

    The computation of the cash is shown below

    = ($1,300 + $15,300 + $28,220)

    = $44,820

    3. Depreciation Expenses A/c Dr $5,626

    To Accumulated Depreciation - Building A/c $5,626

    (Being depreciation expenses is recorded)

    The computation is shown below:

    = (Cost - residual value) : (useful life)

    = ($729,820 - $336,000) : (35 years)

    = ($393,820) : (35 years)

    = $11.252

    The 6 months depreciation would be $5,626
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