Chapter Ten Maria Fonseca……………….

Chapter Ten Maria Fonseca Challenge Exercise 10-1 Expands on: E10-2 LO: 1 Fluffier Company incurred the following costs. 1. Sales tax on factory machinery purchased, $7,000. 2. Painting of and lettering on truck immediately upon purchase, $800. 3. Installation and testing of factory machinery, $2,500. 4. Real estate broker’s commission on land purchased $4,500. 5. Insurance premium paid for first year’s insurance on new truck $930. 6. Cost of landscaping on property purchased $9,200. 7. Cost of paving parking lot for new building, $18,700. 8. Cost of clearing, draining, and filling land, $14,400. 9. Architect’s fees on self-constructed building, $11,000. Instructions: a) Indicate to which account Trudy would debit each of the costs. b) Explain why item 1 is not debited to an expense account. c) Explain why items 7 and 8 are debited to different accounts. Fluffier company Debit credit $2,500 $18,700 $7,000 $14,400 $800 $11,000 $4,500 total amount Challenge Exercise 10-2 Expands on: E10-11 LO: 3 Grace Company owns equipment that cost $70,000 when purchased on January 1, 2017. It has been depreciated using the straight-line method based on estimated salvage value of $7,000 and an estimated useful life of 5 years. Instructions: Prepare Grace Company’s…