During 2014, Garrett’s Book Store paid $315,000 for land and built a store in Baltimore. Prior to construction, the city of Baltimore charged Garrett’s $1,700 for a building permit, which Garrett’s paid. Garrett’s also paid $15,700 for architect’s fees. The construction cost of $718,000 was financed by a long-term note payable, with interest cost of $35,900 paid at completion of the project. The building was completed August 31, 2014. Garrett’s depreciates the building by the straight-line method over 35 years, with estimated residual value of $323,650.
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 for 2014
Explanations are not required.
2. Report Garrett’s Book Store’s plant assets on the company’s balance sheet at December 31, 2014.
3. What will Garrett’s income statement for the year ended December 31, 2014, report for this situation?