Reference no: EM133056812

Question - During the first few days of the year, Coastal Company entered into the following transactions:

1. Purchased a parcel of land with a building on it for $3,500,000 cash. The building, which will be used in operations, has an estimated useful life of30 years and a salvage value of $200,000. The assessed valuations for property tax purposes show the land at $280,000 and the building at $2,520,000.

2. Paid $180,000 for the construction of an asphalt parking lot for customers. The parking lot is expected to last 15 years and has no salvage value.

3. Paid $500,000 for the construction of a new entrance to the building.

4. Purchased store equipment, paying the invoice price (including seven percent sales tax) of $89,660 in cash. The estimated useful life of the equipment is five years, and the salvage value is $4,000.

5. Paid $640 freight on the new equipment.

6. Paid $1,200 to repair damages to floor caused when the store equipment was accidentally dropped as it was moved into place.

7. Paid $50 for an umbrella holder to place inside front door (customers may place wet umbrellas in the holder). The holder is expected to last 20 years.

Required -

a. Prepare journal entries to record these transactions.

b. Prepare the December 31 journal entries to record depreciation expense for the year. Double-declining balance depreciation is used for the equipment, and straight-line depreciation is used for the building and parking lot.