Westwood paid $245,000 in cash. Record the purchase in the journal indenifying each lots cost in a separate land account. Round the decimals two places and use the computed percentages throughout **Educational Content: Allocation and Journal Entry of Lump-Sum Purchase of Land**### Description:Westwood Properties bought three lots in a subdivision for a lump-sum price. An independent appraiser valued the lots as follows:(Click the icon to view the values.)**Lump-Sum Purchase Details:**Westwood paid $245,000 in cash. Record the purchase in the journal, identifying each lot's cost in a separate Land account. Round decimal values to the nearest dollar.### Appraised Values:A small data table appears as follows:- **Lot 1**: Appraised Value - $69,000- **Lot 2**: Appraised Value - $368,000- **Lot 3**: Appraised Value - $23,000### Journal Entry Layout:Below the description area, there is a journal entry recording section with columns for Date, Accounts and Explanation, Debit, and Credit. #### Journal Entry Example:Date | Accounts and Explanation | Debit | Credit-----------------|------------------------------|---------------|--------------- | Land - Lot 1 | **** | | Land - Lot 2 | **** | | Land - Lot 3 | **** | | Cash | | 245,000### Task:- Calculate the respective cost allocated to each lot based on the appraised values.- Enter the calculated costs into the journal entry, ensuring that the total debits equals $245,000 (the lump-sum price paid).### Method for Allocation:1. **Calculate the total appraised value**: $69,000 (Lot 1) + $368,000 (Lot 2) + $23,000 (Lot 3) = $460,000.2. **Determine the allocation ratio for each lot**: - Lot 1 Ratio: $69,000 / $460,000 - Lot 2 Ratio: $368,000 / $460,000 - Lot 3 Ratio: $23,000 / $460,0003. **Allocate the purchase price**: - Lot 1: Ratio * $245,000 - Lot 2: Ratio * $245,000 - Lot 3: Ratio * $245,000### Final Calculated Costs:- **Lot 1**: $69,000 / $460,000 *

In the journal entry, the amount of cash paid would be allocated to each lot with respect to their…

Westwood paid $245,000 in cash. Record the purchase in the journal, identifying each lot's cost in a separate Land account. Round decima Date Accounts and Explanation Debit Credit Appraised Value $ 69,000 368,000 23,000 Data table Lot Lot 1 Lot 2 Lot 3 Print Done - Х

Westwood paid $245,000 in cash. Record the purchase in the journal, identifying each lot's cost in a separate Land account. Round decima Date Accounts and Explanation Debit Credit Appraised Value $ 69,000 368,000 23,000 Data table Lot Lot 1 Lot 2 Lot 3 Print Done - Х

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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