I compute the math as directed. First I take the initial cost of the land and add it to the short-term note. Then, I add the legal fees, delinquent taxes, and demolition costs of the building. I then deduct the amount received from selling the salvage materials. I don't include the cost paid to the contractor. That cost is assigned to the new warehouse. The answers I keep coming up with says incorrect. Determining Cost of LandOn-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $41,000 in cash and giving a short-term note for $324,000.Legal fees paid were $1,310, delinquent taxes assumed were $10,100, and fees paid to remove an old building from the land were $22,800. Materialssalvaged from the demolition of the building were sold for $5,500. A contractor was paid $1,109,600 to construct a new warehouse.Determine the cost of the land to be reported on the balance sheet.

Working: Calculation of cost of land Particulars Amount Initial cost $41,000 Short term note…

Answered: Determining Cost of Land On-Time…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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I compute the math as directed. First I take the initial cost of the land and add it to the short-term note. Then, I add the legal fees, delinquent taxes, and demolition costs of the building. I then deduct the amount received from selling the salvage materials. I don't include the cost paid to the contractor. That cost is assigned to the new warehouse. The answers I keep coming up with says incorrect.

Determining Cost of Land
On-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $41,000 in cash and giving a short-term note for $324,000.
Legal fees paid were $1,310, delinquent taxes assumed were $10,100, and fees paid to remove an old building from the land were $22,800. Materials
salvaged from the demolition of the building were sold for $5,500. A contractor was paid $1,109,600 to construct a new warehouse.
Determine the cost of the land to be reported on the balance sheet.

Expert Solution

Step 1

Working:

Calculation of cost of land

Particulars	Amount
Initial cost	$41,000
Short term note	$324,000
Legal Fees	$1,310
Delinquent taxes	$10,100
Removing cost of old building	$22,800
Scrap sale	($5,500)
Cost of Land	$393,710

Note - $109,600 will not be considered since it will cost of warehouse only and not of land.

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