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12 June, 01:48

Riverwood Properties bought three lots in a subdivision for a? lump-sum price. An independent appraiser valued the lots as?

Lot Appraised Value

Lot 1 ... 76,500

Lot 2 ... 229,500

Lot 3 ... 204,000

Riverwood paid $ 355,000 in cash. Record the purchase in the journal, identifying each lot's cost in a separate Land account. Round decimals to two places, and use the computed percentages throughout?

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  1. 12 June, 02:11
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    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)
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