Question

Fastball Delivery Company acquired an adjacent lot to construct a new warehouse, paying $44,000 and giving a short-term note for $271,000. Legal fees paid were $1,570, delinquent taxes assumed were $9,300, and fees paid to remove an old building from the land were $19,100. Materials salvaged from the demolition of the building were sold for $4,700. A contractor was paid $957,600 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.

Answer 1

Answer:

Total cost of the land = $340,270

Explanation:

According to the scenario, computation of the given data are as follows:

Particulars Amount

Amount paid to acquire lot to construct a new warehouse = ($44,000 + $271,000) = $315,000

Legal fees paid = $1,570

Taxes assumed = $9,300

Fees paid to remove an on building = $19,100

Material salvage sold = $4700

we can calculate the total cost by using following formula:

Total cost of the land = $315,000 + $1,570 + $9,300 + $19,100 - $4700

= $340,270

Hence, Total cost of the land is $340,270 .