Pharoah Company was incorporated on January 2, 2021, but was unable to begin manufacturing activities until July 1, 2021, because new factory facilities were not completed until that date. The Land and Buildings account reported the following items during 2021. January 31 Land and buildings $165,500
February 28 Cost of removal of building 9,885
May 1 Partial payment of new construction 62,670
May 1 Legal fees paid 4,920
June 1 Second payment on new construction 41,500
June 1 Insurance premium 2,280
June 1 Special tax assessment 3,910
June 30 General expenses 38,222
July 1 Final payment on new construction 32,760
December 31 Asset write-up 48,558
410,205
December 31 Depreciation-2021 at 1% (3,970 )
December 31, 2021 Account balance $406,235

The following additional information is to be considered.

1. To acquire land and building, the company paid $85,500 cash and 800 shares of its 8% cumulative preferred stock, par value $100 per share. Fair value of the stock is $110 per share.
2. Cost of removal of old buildings amounted to $9,885, and the demolition company retained all materials of the building.
3. Legal fees covered the following.

Cost of organization $650
Examination of title covering purchase of land 1,390
Legal work in connection with construction contract 2,440
$4,480

4. Insurance premium covered the building for a 2-year term beginning May 1, 2021.
5. The special tax assessment covered street improvements that are permanent in nature.
6. General expenses covered the following for the period from January 2, 2021, to June 30, 2021.

President’s salary $29,277
Plant superintendent’s salary-supervision of new building 4,292
$33,569

7. Because of a general increase in construction costs after entering into the building contract, the board of directors increased the value of the building $53,080, believing that such an increase was justified to reflect the current market at the time the building was completed. Retained earnings was credited for this amount.
8. Estimated life of building-50 years.
Depreciation for 2021-1% of asset value (1% of $399,300, or $3,993).

Required:
a. Prepare entries to reflect correct land, buildings, and depreciation accounts at December 31, 2021.
b. Prepare a balance sheet