2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1.
2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
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On January 1, Mitzu Company pays a lump-sum amount of $2,600,000 for land, Building 1, Building 2, and Land
Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $644,000,
with a useful life of 20 years and a $60,000 salvage value. Land Improvements 1 is valued at $420,000 and is expected to
last another 12 years with no salvage value. The land is valued at $1,736,000. The company also incurs the following
additional costs.
Cost to demolish Building 1
Cost of additional land grading
$ 328,400
175,400
Cost to construct Building 3, having a useful life of 25 years and a $392,000 salvage value
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value
2,202,000
164,000
2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1.
View transaction list
Journal entry worksheet
1
Record the cost of the plant assets, paid in cash.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F115b5e9a-a7c8-4959-a9a2-820880907a9d%2F29ebb4f6-e805-444b-aa5f-7e7102e96d05%2Fy8txo9h_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below]
On January 1, Mitzu Company pays a lump-sum amount of $2,600,000 for land, Building 1, Building 2, and Land
Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $644,000,
with a useful life of 20 years and a $60,000 salvage value. Land Improvements 1 is valued at $420,000 and is expected to
last another 12 years with no salvage value. The land is valued at $1,736,000. The company also incurs the following
additional costs.
Cost to demolish Building 1
Cost of additional land grading
$ 328,400
175,400
Cost to construct Building 3, having a useful life of 25 years and a $392,000 salvage value
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value
2,202,000
164,000
2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1.
View transaction list
Journal entry worksheet
1
Record the cost of the plant assets, paid in cash.
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