Acc291 Accounting Principles: E10-2 Fluffer Company incurred the following costs

Acc291 Accounting Principles
E10-2
Fluffer 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 fluffer 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.
Powered by