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13 October, 12:32

Rodriguez Company pays $352,755 for real estate with land, land improvements, and a building. Land is appraised at $192,000; land improvements are appraised at $72,000; and a building is appraised at $216,000. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase.

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  1. 13 October, 15:36
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    Answer and Explanation:

    Appraised value Percent of Total Appraised

    1. Land $192,000 45%

    2. Land Improvements $72,000 10%

    3. Building $216,000 45%

    Total $440000 100%

    X Total cost of acquisition = Apportioned cost

    1. $352,755 $158,739.75

    2. $352,755 $35,275.5

    3. $352,755 $158,739.75

    total $352,755

    general journal debit credit

    building 158,739.75

    land 35,275.5

    land improvements 158739.75

    cash 352,755
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