Question

On January 1, Carmen Industries bought a parcel of land for use in its operations by paying the seller $100,000 in cash and signing a note payable in the amount of $400,000. The note carries a 12% interest rate and is due in five years. In connection with the purchase of the land, Carmen incurred legal fees of $19,000, a real estate agent sales commission of $25,000, surveying fees of $1,000, and an appraisal fee of $5,000. What is the cost of the land

Answer 1

Answer:

$550,000

Explanation:

The computation of the cost of the land is shown below:

= Cash paid + note payable amount + legal fees incurred + sales commission charged + surveying fees + appraisal fee

= $100,000 + $400,000 + $19,000 + $25,000 + $1,000 + $5,000

= $550,000

For computing the cost of the land we added all the cost given in the question as it is related to the land