Question

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

Answer 1

Step-by-step explanation:

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