In 2020, Ramsey Properties paid $540,000 for a tract of land on which two buildings...
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In 2020, Ramsey Properties paid $540,000 for a tract of land on which two buildings were located. The plan was to demolish Building A and build a new factory (Building C) in its place. Building B was to be used as a company office and was appraised at a value of $189,108. A lighted parking lot near Building B had improvements valued at $50,058. Without considering the buildings or improvements, the tract of land was estimated to have a value of $317,034.
The company incurred the following additional costs:
Costs to demolish Building A
$46,800
Cost to landscape new building site
$69,000
Cost to construct new building (Building C)
542,400
Cost of new land improvements (Land Improvements C)
40,500
Required:
Prepare a schedule having the following column headings: Land, Building B, Building C, Land Improvements B, and Land Improvements C. Allocate the costs incurred by the company to the appropriate columns and total each column.
Prepare a single journal entry dated June 1 to record all of the incurred costs, assuming they were paid in cash on that date.
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