Indicate to which account Trudy would debit each of the costs.

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Question “Indicate to which account Trudy would debit each of the costs.”

E9-2 Trudy Company incurred the following costs.
1. Sales tax on factory machinery purchased $ 5,000
2. Painting of and lettering on truck immediately upon purchase 700
3. Installation and testing of factory machinery 2,000
4. Real estate broker’s commission on land purchased 3,500
5. Insurance premium paid for first year’s insurance on new truck 880
6. Cost of landscaping on property purchased 7,200
7. Cost of paving parking lot for new building constructed 17,900
8. Cost of clearing, draining, and filling land 13,300
9. Architect’s fees on self-constructed building 10,000
Instructions
Indicate to which account Trudy would debit each of the costs.

Answer

The following expenses were incurred by Adama Company.
Indicate to which account Adama would deduct each of these costs.

1.		Factory machinery purchases are subject to sales tax		$5,000		Choose an account that you wish to debit Land improvements Building Land Prepaid insurance Equipment
2.		Paint and lettering immediately after purchase		700		Choose an account that you wish to debit Improvements to Land Prepaid insurance Building Equipment Land
3.		Factory machinery installation and testing		2,000		Choose an account that you wish to debit Prepaid insurance Land improvements Building Equipment Land
4.		Commission paid by a real estate broker for land purchases		3,500		Choose an account that you wish to debit Equipment Land improvements Building Prepaid insurance Land
5.		Premium paid by insurance company for the first year of truck insurance		880		Choose an account that you wish to debit Land improvements Equipment Land Building Prepaid insurance
6.		Purchase of landscaping costs		7,200		Choose an account that you wish to debit Land improvements Building Land Equipment Prepaid insurance
7.		Construction cost of a parking lot for a new building		17,900		Choose an account that you wish to debit Land Land improvements Prepaid insurance Equipment Building
8.		Clearing, draining and filling land costs		13,300		Choose an account that you wish to debit Building Prepaid insurance Equipment Land improvements Land
9.		Self-constructed buildings: Architect’s fees		10,000		Choose an account that you wish to debit Prepaid insurance Land Building Equipment Land improvements

1. Equipment
   

2. Equipment

3. Equipment

4. Land

5. Prepaid insurance

6. Land improvements

7. Land improvements

8. Land

9. Building
   

Conclusion

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