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

Question

Draven Patel

Business

4 March, 11:14

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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Aaden Montgomery · Answer 1

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