P10-6 Interest during Construction Greig Landscaping began construction of a

P10-6 Interest during Construction

Greig Landscaping began construction of a new plant on December 12012. On this date the company purchased a parcel of land for $139000 in cash. In
addition it paid $2000 in survey cost and $4000 for title insurance policy. An old dwelling on the premises was demolished at a cost of $3000 with
$1000 being received from the sale of materials.

Architectural plans were also on December 1 2012 when the architect was paid $30000. The necessary building permits costing $3000 were obtained from the
city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor as follows:

Date of payment Amount of payment

March 1 240000

May 1 330000

July 1 60000

The building was completed on July 1 2013. To finance consturction of this plant Greig borrowed $600000 from the bank on December 1 2012. Greig had no
other borrowings. The $600000 was a 10-year loan bearing interest at 8%.

Instructions:

Compute the balance in each of the following accounts at December 31 2012 and December 31 2013. (Round amounts to the nearest dollar).

a. Land

b. Buildings

c. Interest Expense