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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 Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter2: Asset And Liability Valuation And Income Recognition
Section: Chapter Questions
Problem 11PC: Costs to Be Included in Historical Cost Valuation. At a cost of 200,000, Assume In-N-Out Burger...
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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 / $460,000 3. **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 *
Transcribed Image Text:**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 / $460,000 3. **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 *
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