Question

nash inc initiated a major company expansion on january 4 2025. during the first quarter of 2025 nash aquired several assets that were placed into production on july 1 2025. the following costs were incurred. land purchase for factory 492000, parking lot paving 72000, city assessments for sidewalks 81000, production line equipment 109000, sales tax on equipment 5450, closing cost on land 7700, arcitect fees for new building 21000, price paid to general contractor for building 809000, removal of existing building 22000. purchase of warehouse exchanged 900 shares of nash stock with par value of $5 per share. nash stock is currently trading at $135 per share. installation of equipment 25000. prepare journal entry to record asset aquisitions assuming all assets were purchased with cash except the warehouse

Answer 1

To record the asset acquisitions, you need to prepare journal entries for each individual cost incurred. The journal entries include debiting the relevant asset accounts and crediting the cash account for each cost. The entries should be as follows: Land purchase - Debit Land, Credit Cash ($492,000); Parking lot paving - Debit Building Improvements, Credit Cash ($72,000); City assessments for sidewalks - Debit Building Improvements, Credit Cash ($81,000); and so on.

Step-by-step explanation:

To record the asset acquisitions, we need to prepare journal entries for each individual cost incurred. Here are the journal entries:

1. Land purchase for factory: Debit Land and Credit Cash - $492,000.
2. Parking lot paving: Debit Building Improvements and Credit Cash - $72,000.
3. City assessments for sidewalks: Debit Building Improvements and Credit Cash - $81,000.
4. Production line equipment: Debit Machinery and Equipment and Credit Cash - $109,000.
5. Sales tax on equipment: Debit Machinery and Equipment and Credit Cash - $5,450.
6. Closing cost on land: Debit Land and Credit Cash - $7,700.
7. Architect fees for new building: Debit Building Improvements and Credit Cash - $21,000.
8. Price paid to general contractor for building: Debit Building and Credit Cash - $809,000.
9. Removal of existing building: Debit Building Improvements and Credit Cash - $22,000.
10. Purchase of warehouse with stock exchange: Debit Warehouse and Credit Common Stock and Additional Paid-in Capital - $6,075 ($900 x $5 par value per share).
11. Installation of equipment: Debit Machinery and Equipment Installation and Credit Cash - $25,000.