Question

The following items represent expenditures (or receipts) related to the construction of a new home office for Secrest Investment Company. Cost of land site, which included an abandoned railroad spur $205,000 Legal fees, including title search, relating to land purchase 8,300 Cost of surveying land to confirm boundaries 1,100 Cost of removing railroad tracks 6,500 Payment of delinquent property taxes assumed by the purchaser 6,000 Proceeds from sale of timber from walnut trees cut down to prepare site for construction (23,000) Proceeds from sale of salvaged railroad track (3,500) Grading to prepare land site for construction 8,000 Cost of basement excavation (contracted separately) 3,700 Architect's fees on new building 128,000 Payment to building contractor-original contract price 3,400,000 Cost of changes during construction to make building more energy efficient 95,000 Cost of replacing windows broken by vandals 2,400 Cost of paving driveway and parking lot 17,000 Out-of-court settlement for mud slide onto adjacent property 10,000 Special assessment for paving city sidewalks (paid to city) 26,000 Cost of brick and wrought iron fence installed across front of property 20,500 Required From the given data, compute the proper balances for the Land, Building, and Land Improvements accounts of Secrest Investment Company. Land $ Answer Building $ Answer Land Improvements $ Answer

Answer 1

	Land	Building	Land Improvement
Cost of land site, which included an abandoned railroad spur	205000
Legal fees, including title search, relating to land purchase	8300
Cost of surveying land to confirm boundaries	1100
Cost of removing railroad spur	6500
Payment of delinquent property taxes assumed by the purchaser	6000
Proceeds from sale of timber from walnut trees cut down to prepare site for construction	-23000
Proceeds from sale of salvaged railroad track	-3500
Grading to prepare land site for construction	8000
Cost of basement excavation (contracted separately)		3700
Architect's fees on new building		128000
Payment to building contractor-original contract price		3,400,000
Cost of changes during construction to make building more energy efficient		95000
Cost of replacing windows broken by vandals*
Cost of paving driveway and parking lot			17000
Out of court settlement for mud slide onto adjacent property**
Special assessment for paving city sidewalks (paid to city)	26000
Cost of brick and wrought iron fence installed across front of property			20500
	234,400	3,626,700	37,500

*Cost of replacing windows broken by vandals is a repairs cost.

**Out of court settlement for mud slide onto adjacent property is not a cost incurred for getting the asset ready for its intended use.