P10-6 (Interest DuringConstruction) Grieg Landscaping began construction of anew plant on December 1, 2017. On this date, the company purchaseda parcel of land for $139,000 in cash. In addition, it paid $2,000in surveying costs and $4,000 for a title insurance policy. An olddwelling 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 permitscosting $3,000 were obtained from the city and paid for on December1 as well. The excavation work began during the first week inDecember with payments made to the contractor in 2018 asfollows.
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 $600,000from 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 atDecember 31, 2017, and December 31, 2018. (Round amounts to thenearest dollar.)
(a)Land.
(b)Buildings.
(c)InterestExpense.
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