Question

Help Save & EX Check my Rodriguez Company pays $379,080 for real estate with land, land improvements, and a building. Land is appraised at $270,000, land improvements are appraised at $54,000, and a building is appraised at $216,000. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase. Complete this question by entering your answers in the tabs below. Required 1 Required 2 aces Allocate the total cost among the three assets. (Round your "Apportioned Cost" answers to 2 decimal places.) Appraised Value Percent of Total Appraised Total cost of Acquisition = Apportioned C ost Value Land Land improvements Building Totals Required 2 >

Answer 1

Solution

Rodriguez Company

Allocation of the total cost among the three assets purchased:

	Appraised Value	Percent of Total Appraised value	x total cost of acquisition	Apportioned Cost
Land	$270,000	50%	x 379,080	= $189,540
Land Improvements	$54,000	10%	x 379,080	= $37,908
Building	$216,000	40%	x 379,080	= $151,632
Totals	$540,000	100%		$379,080

Computations:

Total cost of acquisition = $379,080

Allocation of total cost is as follows,

Land    379,080 x 50% = 189,540

Land improvements = 379,080 x 10% = $37,908

Building = 379,080 x 40% = 151,632

Journal entry to record the purchase:

Date	Account Titles	Ref. No.	Debit	Credit
	Land		$189,540
	Land Improvements		$37,908
	Building		$151,632
	Cash			$379,080