acc423 greig landscaping began construction of a new plant on december 1 2012 491603

P10-6 Interest during Construction

Greig Landscaping began construction of a new plant on December 1,2012. On this date, the company purchased a parcel of land for $139,000 in cash. In addition it paid $2,000 in survey cost and $4,000 for title insurance policy. An old dwelling on the premises was demolished at a cost of $3,000 with $1,000 being received from the sale of materials.

Architectural plans were also on December 1, 2012 when the architect was paid $30,000. The necessary building permits costing $3,000 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 as follows:

Date of payment Amount of payment

March 1 240,000

May 1 330,000

July 1 60,000

The building was completed on July 1, 2013. To finance consturction of this plant, Greig borrowed $600,000 from the bank on December 1, 2012. Greig had no other borrowings. The $600,000 was a 10-year loan bearing interest at 8%.

Instructions:

Compute the balance in each of the following accounts at December 31, 2012, and December 31, 2013. (Round amounts to the nearest dollar).

a. Land

b. Buildings

c. Interest Expense