Cala Manufacturing purchases a large lot on which an old building is located as
ID: 2474940 • Letter: C
Question
Cala Manufacturing purchases a large lot on which an old building is located as part of its plans to build a new plant. The negotiated purchase price is $221,000 for the lot plus $116,000 for the old building. The company pays $39,600 to tear down the old building and $58,539 to fill and level the lot. It also pays a total of $1,891,083 in construction costs-this amount consists of $1,778,800 for the new building and $112,283 for lighting and paving a parking area next to the building. prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.Explanation / Answer
Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash
Dr Land 435,139 (221,000+116,000+39,600+58539)
Dr Building 1,778,800
Dr Land Improvements 112,283
Cr Cash 2,326,222