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Part 1
Required information The following information applies to the questions displayed below) On January 1, Mitzu Co. pays a lump-
Part 2
Required information 2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on Jan
Part 3
164,000 3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first yea
View transaction list Journal entry worksheet < 1 2 3 4 Record the year-end adjusting entry for the depreciation expense of B
3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first year these
3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first year these
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Answer #1

Solution

Mitzu Co

  1. Apportioned costs –

Allocation and purchase price

Appraised Value

%

total cost of acquisition

Apportioned Cost

Land

$1,736,000

62%

$2,600,000

$1,612,000

Building 2

$644,000

23%

$2,600,000

$598,000

Land Improvements1

$420,000

15%

$2,600,000

$390,000

Total

$2,800,000

100%

$2,600,000

$2,600,000

  1. Cash costs –

Land

Building 2

Building 3

Land Improvements 1

Land Improvements 2

Purchase price

$1,612,000

$598,000

0

$390,000

0

Demolition

$328,400

0

0

0

0

Land grading

$175,400

0

0

0

Building 3 (Construction cost)0

$2,202,000

0

0

New Improvements Cost0

0

0

$164,000

Totals

$2,115,800

$598,000

$2,202,000

$390,000

$164,000

Entry to record cost of the plant assets, paid in cash:

Date

Account Titles and Explanation

Ref. No.

Debit

Credit

1-Jan

Land

$2,115,800

Building 2

$598,000

Building 3

$2,202,000

Land Improvements 1

$390,000

Land Improvements 2

$164,000

Cash

$5,469,800

(To record cost of plant assets paid in cash)

Computations:

Year-end adjusting entry for depreciation expense of Building 2:

Date

Account Titles and Explanation

Ref. No.

Debit

Credit

31-Dec

Depreciation Expense - Building 2

$26,900

Accumulated Depreciation - Building 2

$26,900

(To record depreciation expense on Building 2, (598,000 - 60,000)/20 = $26,900)

Year-end adjusting entry for depreciation expense of Building 3:

Date

Account Titles and Explanation

Ref. No.

Debit

Credit

31-Dec

Depreciation Expense - Building 3

$73,400

Accumulated Depreciation - Building 3

$72,400

(To record depreciation expense on Building 3, (2,202,000 - 392,000)/25 = $72,400)

Year-end adjusting entry for depreciation expense of Land Improvements 1:

Date

Account Titles and Explanation

Ref. No.

Debit

Credit

31-Dec

Depreciation Expense – Land Improvements 1

$32,500

Accumulated Depreciation – Land Improvements 1

$32,500

(To record depreciation expense on Land

Improvement 1, (390,000)/12 = $32,500)

Year-end adjusting entry for depreciation expense of Land Improvement 2:

Date

Account Titles and Explanation

Ref. No.

Debit

Credit

31-Dec

Depreciation Expense – Land Improvement 2

$8,200

Accumulated Depreciation – Land Improvement 2

$8,200

(To record depreciation expense on Land Improvement 2, (164,000)/20 = $8,200)

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