Question

On April 12, 2017, Prism Ltd., a camera lens manufacturer, paid cash of $558,200 for real estate plus $30,000 cash in closing costs. The real estate included land appraised at $216,000, land improvements appraised at $84,000; and a building appraised at $300,000. Present the journal entry to record the purchase. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) View transaction list Journal entry worksheet Record the costs of lump-sum purchase. Note: Enter debits before credits. General Journal Debit Credit Date April 12, 2017 Record entry Clear entry View general journal

Answer 1

Total cost of lump-sum purchase = Cash purchase price + Closing costs

= 558,200 + 30,000

= $588,200

Asset	Appraised value	Percentage of appraised value	Allocated cost
Land	216,000	216,000/600,000 = 36%	588,200 x 36% = $211,752
Land improvements	84,000	84,000/600,000 = 14%	588,200 x 14% = $82,348
Building	300,000	300,000/600,000 = 50%	588,200 x 50% = $294,100
	$600,000	100%	$588,200

Journal

Date	Account title	Debit	Credit
April 12, 2017	Land	$211,752
	Land improvements	$82,348
	Building	$294,100
	Cash		$588,200
	(To record lump-sum purchase)

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Answer 2

On April 12, 2020, Prism Ltd., a camera lens manufacturer, paid cash of $552,200 for real estate plus $29,500 cash in closing costs. The real estate included land appraised at $243,950; land improvements appraised at $77,350; and a building appraised at $273,700.