Question

Below are transactions related to Impala Company.

(a)
The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $82,400.
(b)
14,000 shares of common stock with a par value of $54 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $824,000, of which $182,900 has been allocated to land and $641,100 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $70 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $62 per share.
(c)
No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.
Materials used
$12,820
Factory supplies used
980
Direct labor incurred
16,230
Additional overhead (over regular) caused by construction of
machinery, excluding factory supplies used
2,720
Fixed overhead rate applied to regular manufacturing operations
60% of direct labor cost
Cost of similar machinery if it had been purchased from
outside suppliers
44,960
Prepare journal entries on the books of Impala Company to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Answer:

(a)

Dr Land 82,400

Cr Grant Revenue 82,400

(b)

Dr Buildings 641,100

Dr Land 182,900

Cr Share Capital—Ordinary 756,000

Cr Share Premium—Ordinary 68,000

(c)

Dr Machinery 42,488

Cr Direct Labor 16,230

Cr Factory Overhead 13,438

Cr Materials 12,820

Explanation:

City of Pebble Beach Journal entries

(a)

Dr Land 82,400

Cr Grant Revenue 82,400

(b)

Dr Buildings 641,100

Dr Land 182,900

Cr Share Capital—Ordinary 756,000

($54×$14,000)

Cr Share Premium—Ordinary 68,000

(c)

Dr Machinery 42,488

Cr Direct Labor 16,230

Cr Factory Overhead 13,438

Cr Materials 12,820

Fixed overhead applied (60% × $16,230) $9,738

Additional overhead 2,720

Factory supplies used 980

$13,438