Question

Cala Manufacturing purchases land for $489,000 as part of its plans to build a new plant. The company pays $35,300 to tear down an old building on the lot and $52,183 to fill and level the lot. It also pays construction costs $1,667,600 for the new building and $105,264 for lighting and paving a parking area. Prepare a single journal entry to record the costs incurred by Cala, all of which are paid in cash.

Answer 1

Answer:

Cala Manufacturing

Journal Entry

Debit Land $489,000

Debit Land $35,300

Debit Land $52,183

Debit Building $1,667,600

Debit Parking Lot $105,264

Credit Cash $2,349,347

To record the purchase of land, its preparation, construction of a new Building and a Parking Lot for cash.

Explanation:

a) Data and Analysis:

Land $489,000

Land $35,300 (Land preparation)

Land $52,183 (Land preparation)

Building $1,667,600 (construction)

Parking Lot $105,264

Cash $2,349,347