In: Accounting
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.
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.