Question

Cala Manufacturing purchases land for $390,000 as part of its plans to build a new plant. The company pays $33,500 to tear down an old building on the lot the and $47,000 to fill and level the lot. It also pays construction costs of $1,452,200 for the new building and $87,800 for lighting and paving a parking area. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.

Answer 1

Answer:

Explanation:

The journal entry is shown below:

Land A/c Dr $470,500

Land Improvement A/c Dr $87,800

Building A/c Dr $1,452,200

 To Cash A/c                               $2,010,500

(Being these costs are recorded)

The computation of the land is shown below:

= Purchase cost of new plant + tear down cost + fill and level the lot cost

= $390,000 + $33,500 + $47,000

= $470,500