Question

For the year ended December 31, 2018, Carla Vista Ltd. had the following transactions related to the purchase of property. Assume all transactions are for cash unless otherwise stated.

Feb. 7 Purchased real estate for $ 1 million, paying $ 292,700 cash and signing a mortgage payable for the balance. The site had an old building on it and the current values of the land and building were $ 0.9 million and $ 101,400, respectively. The old building will be demolished and a new apartment building will be constructed on the site.

9 Paid legal fees of $ 20,080 on the real estate purchase of February 7.

15 Paid $ 61,670 to demolish the old building and make the land ready for the construction of the apartment building.

16 Received $ 15,880 from the sale of material from the demolished building.

28 Paid $4,000 to grade the land in preparation for the construction of the apartment building.

Mar. 2 Paid architect fees of $ 67,570 to design the apartment building.

July 2 The full cost for construction of the apartment building was $ 2.7 million. Paid $ 732,330 cash and signed a bank loan payable for the balance.

3 Purchased a one-year insurance policy on the finished building for $ 10,830.

Aug. 29 Paid $ 46,700 for the paving of sidewalks and a parking lot for the building.

Record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
Feb. 7Feb. 9Feb. 15Feb. 16Feb. 28Mar. 2July 2July 3Aug. 29
Feb. 7Feb. 9Feb. 15Feb. 16Feb. 28Mar. 2July 2July 3Aug. 29
Feb. 7Feb. 9Feb. 15Feb. 16Feb. 28Mar. 2July 2July 3Aug. 29

Answer 1

Journal Entries for

A. Purchase of Asset (Feb7)

Real Estate Property A/c Dr 1000000

To Cash A/c 292700

To Account payable A/c 707300

B. Legal Fee paid (Feb 9)

Legal Fee paid A/c 20080

To cash A/c 20080

(Amiount paid as legal Fee shall be Capitalised)

C.Demilision charges Piad (Feb 15)

Demolision charges A/c Dr 61670

To Cash Cr 61670

(Amount shall be capitalised)

D. Cash Received on sale of Material after demilision (Feb 16)

.Cash A/c Dr 15880

To gain on sale of Material 15880

( Shall be reduced from the Capitaliisation value)

E.Expense incurred to grade the land (Feb 28)

Land Expenses A/c Dr 4000

To Cash A/c 4000

F. Architect Fee paid to design the Building (March 2)

.Architect Fee (Fixed Asset A/c) 67570

To Cash A/c 67570

(Shall be Capitalised)

G.Insurance Expenses( July3)

Insurance Expenses fro Building 10830

To Cash 10830

( Shall bve Capitalised)

H. Parkig Lot & Paving Charges (Aug 29)

parking & Paving Charges A/c 46700

To cash 46700

(Shall be Capitalised)

NOTE L All the Csots incuirred shall be caopitalised to Fixed Asset