During 2012, Cheng Book Store paid $483,000 for land and built a store in Georgetown. Prior to construction, the city of Georgetown charged Cheng $1,300 for a building permit, which Cheng paid. Cheng also paid $15,300 for architect’s fees. The construction cost of $685,000 was financed by a longterm note payable, with interest cost of $28,220 paid at completion of the project. The building was completed June 30, 2012. Cheng depreciates the building by the straight-line method over 35 years, with estimated residual value of $336,000.
1. Journalize 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
Explanations are not required.
2. Report Cheng Book Store’s plant assets on the company’s balance sheet at December 31, 2012.
3. What will Cheng’s income statement for the year ended December 31, 2012, report for these facts?