Question

In: Accounting

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.

Solutions

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.


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