Solved by verified expert :Bridges Wholesale Company
incurred the following costs in 2015 for a warehouse acquired on July 1, 2015,
the beginning of its fiscal year:
Cost
of land ……. $132,000 Landscaping….. $31,000
Cost
of building….. $528,000 Property tax for period prior to
acquisition….. $10,000
Remodeling
and repairs prior to occupancy $58,200 Real
estate commission …… $40,000
Escrow
fee…. $ 12,000
The company signed a
non-interest-bearing note for on July 1, 2015. The implicit interest rate is
compounded semiannually. Payments of are to be made semiannually beginning
December 31, 2015, for 10 years.
Instructions:
Give the required journal entries to record
(1)
the acquisition of the land and building (assume that cash is paid to equalize
the cost of the assets and the present value of the note) and
(2)
the first two semiannual payments, including amortization of note discount.
