On March 31, 2020, Capital Investment Advisers paid $4,530,000 for land with two buildings on it. The plan was to demolish Building 1 and build a new store (Building 3) in its place. Building 2 was to be used as a company office and was appraised at a value of $1,307,320. A lighted parking lot near Building 2 had improvements (Land Improvements 1) valued at $560,280. Without considering the buildings or improvements, the tract of land was estimated to have a value of $2,801,400. Capital incurred the following additional costs: Cost to demolish Building 1 $ 691,160 Cost of additional landscaping 270,020 Cost to construct new building (Building 3) 2,472,000 Cost of new land improvements near Building 2 (Land Improvements 2) 253,800 Required: 1. Allocate the costs incurred by Capital to the appropriate columns and total each column. 2. Prepare a single journal entry dated March 31, 2020, to record all the incurred costs, assuming they were paid in cash on that date.
On March 31, 2020, Capital Investment Advisers paid $4,530,000 for land with two buildings on it. The plan was to demolish Building 1 and build a new store (Building 3) in its place. Building 2 was to be used as a company office and was appraised at a value of $1,307,320. A lighted parking lot near Building 2 had improvements (Land Improvements 1) valued at $560,280. Without considering the buildings or improvements, the tract of land was estimated to have a value of $2,801,400. Capital incurred the following additional costs: Cost to demolish Building 1 $ 691,160 Cost of additional landscaping 270,020 Cost to construct new building (Building 3) 2,472,000 Cost of new land improvements near Building 2 (Land Improvements 2) 253,800 Required: 1. Allocate the costs incurred by Capital to the appropriate columns and total each column. 2. Prepare a single journal entry dated March 31, 2020, to record all the incurred costs, assuming they were paid in cash on that date.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On March 31, 2020, Capital Investment Advisers paid $4,530,000 for land with two buildings on it. The plan was to demolish Building 1 and build a new store (Building 3) in its place. Building 2 was to be used as a company office and was appraised at a value of $1,307,320. A lighted parking lot near Building 2 had improvements (Land Improvements 1) valued at $560,280. Without considering the buildings or improvements, the tract of land was estimated to have a value of $2,801,400. Capital incurred the following additional costs:
| Cost to demolish Building 1 | $ | 691,160 | |
| Cost of additional landscaping | 270,020 | ||
| Cost to construct new building (Building 3) | 2,472,000 | ||
| Cost of new land improvements near Building 2 (Land Improvements 2) | 253,800 | ||
Required:
1. Allocate the costs incurred by Capital to the appropriate columns and total each column.
2. Prepare a single
Transcribed Image Text:Required:
1. Allocate the costs incurred by Capital to the appropriate columns and total each column.
Land
Land
Land
Building 2
Building 3
Improvements 1
Improvements 2
Purchase price
Demolition
691,160
Landscaping
270,020
New building
2,472,000
New improvements
253,800
Totals
$
961,18
2$
2,472,000 $
$
253,800
Transcribed Image Text:2. Prepare a single journal entry dated March 31, 2020, to record all the incurred costs, assuming they were paid in cash on that date.
View transaction list
View journal entry worksheet
No
Date
General Journal
Debit
Credit
1
Mar 31
Land
Building 2
Building 3
2,472,000
Land improvements 1
Land improvements 2
253,800
Cash
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