Question

z Company pays $355,000 for real estate plus $18,815 in closing costs, The real estate consists of land land improvements appratsed at $75,000: and a building appraised at $200,000 1. Allocate the total cost among the three purchased assets. 2. Prepare the journal entry to record the purchase Answer is not complete. plete this question by entering your answers in the tabs below. Allocate the total cost among the three purchased assets. (Round your "Apportioned Cost" answers to 2 decimal places.) Percent of Total Appraised x Total Cost of Value Cost 50% 0.373,815 os 15% x373 815 142 000 00。 75,000 159,750 00 301.750 00 110%
Help me pla

Answer 1

SOLUTION

A.

	Appraised value ($)	Percentage of total appraised value (A)	Total cost of acquisition (B)	Apportioned cost (A*B)
Land	225,000	45%	373,815	168,217
Land improvements	75,000	15%	373,815	56,072
Building	200,000	40%	373,815	149,526
Total	500,000	100%		373,815

Total cost of acquisition = $355,000 + $18,815 = $373,815

B. Journal entry-

S.No.	Accounts titles and Explanation	Debit ($)	Credit ($)
1.	Land	168,217
	Land improvements	56,072
	Buildings	149,526
	Cash		373,815
	(To record the purchase)