Question: The following account balances were included in Bromley Company s balance

The following account balances were included in Bromley Company’s balance sheet on December 31, 2015:
Land............ $ 100,000
Land improvements........ 20,000
Buildings........... 300,000
Machinery and equipment...... 500,000
During 2016, the following transactions occurred:
1. Land was acquired for $ 70,000 for a future building site. Commissions of $ 4,000 were paid to a real estate agent.
2. A factory and land were acquired from Kent Development Company by issuing 20,000 shares of $ 3 par com-mon stock. At that time, the stock was selling for $ 10 per share on the New York Stock Exchange. The inde-pendently appraised values of the land and the factory were $ 60,000 and $ 180,000, respectively.
3. Equipment was acquired at a cost of $ 120,000. In addition, sales tax, freight costs, and installation costs were $ 7,000, $ 10,000, and $ 16,000, respectively. During installation, the equipment was damaged, and $ 2,000 was spent for repairs.
4. A new parking lot was installed at a cost of $ 30,000.
5. Half the land purchased in Item 1 was prepared as a building site. Costs of $ 26,000 were incurred to clear the land, and the timber recovered was sold for $ 3,000. A new building was built for $ 60,000. Architect’s fees relating to construction were $ 18,000, and imputed interest on equity funds used during construction was $ 15,000. No debt is outstanding.
6. Costs of $ 20,000 were incurred to improve some leased office space. The lease will terminate in 2018 and is not expected to be renewed.
7. A group of new machines was purchased under a royalty agreement that provides for payment of annual royal-ties based on units produced. The invoice price of the machines was $ 30,000, freight costs were $ 2,000, and royalty payments for 2016 were $ 12,000.
Prepare journal entries to record all the preceding events. Unless otherwise indicated, assume the company makes all payments in cash.

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  • CreatedOctober 05, 2015
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