Reference no: EM131962129
Problem
Novak Landscaping began construction of a new plant on December 1, 2017. On this date, the company purchased a parcel of land for $146,400 in cash. In addition, it paid $2,880 in surveying costs and $4,560 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,360, with $960 being received from the sale of materials.
Architectural plans were also formalized on December 1, 2017, when the architect was paid $36,000. The necessary building permits costing $3,360 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2018 as follows.
Date of Payment Amount of Payment
March 1 $256,800
May 1 339,600
July 1 67,200
The building was completed on July 1, 2018.
To finance construction of this plant, Novak borrowed $608,400 from the bank on December 1, 2017. Novak had no other borrowings. The $608,400 was a 10-year loan bearing interest at 8%.
Compute the balance in each of the following accounts at December 31, 2017, and December 31, 2018
(a) Balance in Land Account
(b) Balance in Building
(c) Balance in Interest Expense.
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