Easton Manufacturing Co. was incorporated on 1/2/20 but was unable to begin manufacturing activities until 8/1/20 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/20 per the books was as follows:
| Date | Item | Amount |
| 1/31/20 | Land and dilapidated building | $200,000 |
| 2/28/20 | Cost of removing building | 4,000 |
| 4/1/20 | Legal Fees | 6,000 |
| 5/1/20 | Fire insurance premium payment | 5,400 |
| 5/1/20 | Special tax assessment for streets | 4,500 |
| 5/1/20 | Partial payment of new building construction | 210,000 |
| 8/1/20 | Final payment on building construction | 210,000 |
| 8/1/20 | General expenses | 30,000 |
| 12/31/20 | Asset write-up |
75,000 |
| Total: $744,900 |
Additional information:
1. To acquire the land and building on 1/31/20, the company paid $100,000 cash and 1,000 shares of its common stock (par value = $100/share) which is very actively traded and had a fair value per share of $180.
2. When the old building was removed, Easton paid Kwik Demolition Co. $4,000, but also received $1,500 from the sale of salvaged material.
3. Legal fees covered the following: cost of organization, $2,500; examination of title covering purchase of land, $2,000 and legal work in connection with the building construction, $1,500.
4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2020.
5. General expenses covered the following for the period 1/2/20 to 8/1/20: President’s salary, $20,000 and Plant superintendent covering supervision of new building, $10,000.
6. Because of the rising land costs, the president was sure that the land was worth at least $75,000 more than what it cost the company.
Prepare a schedule to determine the proper balances as of 12/31/20 for the land account and the buildings account. To receive full credit, you must label all the relevant amounts and disclosing all computations.
