Acc/422 P10-6 (LO1,3) (Interest During Construction) Grieg Landscaping began construction of a new plant, accounting homework help
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P10-6 (LO1,3) (Interest During Construction) Grieg Landscaping began construction of a new plant on December 1, 2017. On this date, the company purchased a parcel of land for $139,000 in cash. In addition, it paid $2,000 in surveying costs and $4,000 for a 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 formalized on December 1, 2017, 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 in 2018 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, 2018.
To finance construction of this plant, Grieg borrowed $600,000 from the bank on December 1, 2017. Grieg 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, 2017, and December 31, 2018. (Round amounts to the nearest dollar.)
(a)Land.
(b)Buildings.
(c)Interest Expense.
