Mason’s Manufacturing Ltd began operations during 2015. The company had

Mason’s Manufacturing Ltd began operations during 2015. The company had a building constructed and acquired manufacturing equipment during the first 6 months of the year. Manufacturing operations began early in July 2015. The company’s accountant, who was unsure how to treat property, plant and equipment transactions, opened a Property, Plant and Equipment account and debited (credited) that account for all the expenditures and receipts involving assets as shown on the next page (all costs are net of GST).


1.


2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

Cost of real estate purchased: Land

Old building

Paid for the demolition of the old building to prepare the site for a new one.

Paid for taxes in arrears on the property in (1)

Paid fee for title search on property in (1)

Received for sale of salvaged materials from old building

Paid architect for designing new building

Paid for a temporary fence around the construction site

Paid excavation costs for new building

Partial payment to building contractor

Paid for construction of parking spaces and installation of parking area lights

Paid interest on building loan during construction

Made final payment to building contractor

Paid for manufacturing equipment

Paid freight on manufacturing equipment

Paid installation costs of manufacturing equipment

Paid for removal of temporary fencing around construction site

Received for temporary fencing materials salvaged

Paid for repair of manufacturing equipment that was damaged during installation

$

113 400

35 000

15 000

6 700

600

(4 600

40 000

23 300

84 000

225 000

15 700

18 000

275 000

84 000

1 600

2 900

1 300

(500

       800






)












)

Property, Plant and Equipment account balance

$

937 200













Required

A. Prepare a schedule similar to the one below. Analyse each transaction and enter the payment (receipt) in the appropriate column. Total the columns.


Item no.

Land

Land improvements

Building

Manufacturing equipment

Other




















B. Prepare a general journal entry to close the $937 200 balance in the Property, Plant and Equipment account and allocate the transactions to their appropriate accounts.

C. Prepare an entry to record depreciation expense for half the year to 31 December 2015 on land improvements, building and manufacturing equipment using straight-line depreciation. Useful lives and residual values are:



Useful life

Residual value

Land improvements

10 years

$ —

Building

20 years

$46 100

Manufacturing equipment

8 years

7 500

Related Book For answer-question

Accounting

9th edition

Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett

ISBN: 978-1118608227

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