(8-3)

[The following information applies to the questionsdisplayed below.]
In January 2017, Mitzu Co. pays $2,700,000 for a tract of land withtwo buildings on it. It plans to demolish Building 1 and build anew store in its place. Building 2 will be a company office; it isappraised at $678,500, with a useful life of 20 years and a $75,000salvage value. A lighted parking lot near Building 1 hasimprovements (Land Improvements 1) valued at $501,500 that areexpected to last another 17 years with no salvage value. Withoutthe buildings and improvements, the tract of land is valued at$1,770,000. The company also incurs the following additionalcosts:

Cost to demolish Building 1	$	341,400
Cost of additional land grading		187,400
Cost to construct new building (Building 3), having a usefullife of 25 years and a $402,000 salvage value		2,202,000
Cost of new land improvements (Land Improvements 2) nearBuilding 2 having a 20-year useful life and no salvage value		173,000

Required:

1. Allocate the costs incurred by Mitzu to theappropriate columns and total each column.

2. Prepare a single journal entry to record allthe incurred costs assuming they are paid in cash on January 1,2017.

3. Using the straight-line method, prepare theDecember 31 adjusting entries to record depreciation for the 12months of 2017 when these assets were in use.