Answer:
Explanation:
The cost allocation of each lot is presented below:
(A) (B) (A × B)
Lot Appraised Value Percentage Purchase value Allocated cost
Lot 1 $76,500 15% $355,000 $53,250
Lot 2 $229,500 45% $355,000 $159,750
Lot 3 $204,000 40% $355,000 $142,000
Total $510,000 100% $355,000
Now the journal entry would be
Land - Lot 1 $53,250
Land - Lot 2 $159,750
Land - Lot 3 $142,000
To Cash A/c $355,000
(Being the lots are purchased for cash)
