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In 2020, Ramsey Properties paid $540,000 for a tract of land on which two buildings...

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Accounting

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:

  1. 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.
  2. 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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