A company paid $325,000, plus a 7% commission and $26,000 in closing costs for a property....

A company paid $325,000, plus a 7% commission and $26,000 in closing costs for a property. The property included land appraised at $250,500, land improvements appraised at $75,000, and a building appraised at $10,000. The company paid cash for this property, show the journal entry to record the purchase.

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Expert Solution

Ans:

Event	General Journal	Debit	Credit
1	Land	$279059
	Land Improvements	$83551
	Building	$11140
	Cash		$373750

Purchase price=Cash Paid +7% commission + Closing cost of property

=$325000+$325,000*7%+$26000

=$373,750

	Working Notes
1.Asset	Fair Value	Percentage of total fiar value	Initial Value % of $373750
Land	250,500	0.746646796	279059
Land Improvements	75,000	0.223546945	83551
Building	10,000	0.029806259	11140
	335,500		373750

Hope this helped ! Let me know in case of any queries.

ekkarill92 answered 1 year ago

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