Question

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.

Answer 1

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