Question

Exercise 8-3 Lump-sum purchase of plant assets LO C1 Rodriguez Company pays $352,755 for real estate with land, land improvements, and a building. Land is appraised at $184,500; land improvements are appraised at $41,000; and a building is appraised at $184,500. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase.

Answer 1

1.) Land Land Imrovements Building Appriased Total Appraised Value Percent of Total Appraised Value $ 184,500 $ 41,000 $ 184,500 $ 410,000 x Total Cost of Acquistion x Apportioned Cost 45% x 352755 $ 158,740 10% x 352755 $ 35.276 45% x 352755 $ 158,740 100% $ 352,755 2). Transaction Debit Credit $ $ General Journal 1 Land Land Improvements Buildings Cash (Being Purchase of land and building recorded) 158,740 35,276 158,740 $ $ 352,755