Respuesta :
Answer:
1. Land cost $177,693.75
Land improvement cost $59,231.25
Building cost $157,950 .00
2. Debit Land $177,693.75
Debit Land improvements $59,231.25
Credit Building $157,950 .00
Being entry to record the cost of real estate purchased.
Explanation:
Total cost of the real estate purchase will include the closing cost which is a key cost element. The allocated costs among the 3 purchased assets will be done proportionally to the appraised cost of each asset.
Total appraised value of the real estate purchased
= $189,000 + $63,000 + $168,000
= $420,000
Total cost of real estate based on payment
= $375,000 + $19,875
= $394,875
Cost allocated to;
Land improvements = ($63,000/$420,000) × $394,875
= $59,231.25
Land = ($189,000/$420,000) × $394,875
= $177,693.75
Building = ($168,000/$420,000) × $394,875
= $157,950 .00
The entry required would be debits to the individual assets account and a lump sum credit to cash for the transaction.
Answer:
A. Land 177,693.75
Land improvements 59,231.25
Building157,950.00
B.
Journal Entry
Dr Land+/-177,693.75
Dr Land improvements+/-59,231.25
Dr Building+/-157,950.00
Cr Cash+/-394,875.00
Explanation:
Land appraised at $189,000
Land improvements appraised at $63,000 Building appraised at $168,000
TOTAL 420,000
% of Total × Total cost of Acquisition
Appraisal
volume
45% ×394,875=177,693.75Apportioned cost
15% ×394,875=59,231.25 Apportioned cost
40%×394,875=157,950.00 Apportioned cost
Total 100% =394,875.00
Purchase price 375,000 + Closing cost 19,875 = Total cost of acquisition 394,875
For percentage use total cost divided by appraised value 189,000 / 420,000 = 45%
For percentage use total cost divided by appraised value 63,000 / 420,000 = 15%
For percentage use total cost divided by appraised value 168,000 / 420,000 = 40%
Allocation of total cost: Land(394,875x 0.45) = 177,693.75.00 + land improvement (394,875 x 0.15) = 59,231.25+ building (394,875 x 0.4) = 157,950.00
177,693.75+59,231.25+157,950.00= Total 394,875.00
B. Journal entry to record the purchase
Dr Land+/-177,693.75
Dr Land improvements+/-59,231.25
Dr Building+/-157,950.00
Cr Cash+/-394,875.00
