Question

Rodriguez Company pays $320,000 for real estate plus $16,960 in closing costs. The real estate consists of land appraised at $207,000; land improvements appraised at $69,000; and a building appraised at $184,000.

Required:
1. Allocate the total cost among the three purchased assets.
2. Prepare the journal entry to record the purchase.

Allocate the total cost among the three purchased assets. (Round your "Apportioned Cost" answers to 2 decimal places.)

	Appraised Value Percent of Total Appraised Value x Total Cost of Acquisition = Apportioned Cost Land Land improvements Building Totals $0 0% $0.00

• Record the costs of lump-sum purchase.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit 1

Answer 1

• All working forms part of the answer
• Requirement 1

Allocation of Total Cost	Appriased Value	% of total appraised value	Total cost of acquisition	Apportioned Cost
Land	$                           207,000.00	45.0%	$                   336,960.00	$                                     151,632.00
Land Improvements	$                             69,000.00	15.0%	$                   336,960.00	$                                        50,544.00
Building	$                          184,000.00	40.0%	$                   336,960.00	$                                      134,784.00
Total	$                           460,000.00	100%		$                                      336,960.00

• Requirement 2

Accounts title	Debit	Credit
Land	$             151,632.00
Land Improvements	$               50,544.00
Building	$             134,784.00
Cash		$                   336,960.00
(lumpsum puchases recorded)