Question

Rodriguez Company pays $336,960 for real estate with land, land improvements, and a building. Land is appraised at $189,000; land improvements are appraised at $84,000; and a building is appraised at $147,000. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Allocate the total cost among the three assets. (Round your "Apportioned Cost" answers to 2 decimal places.) Appraised Value Percent of Total Appraised x Total Cost of Acquisition Value = Apportioned Cost Land Land improvements Building Totals < Required 1 Required 2 >

Answer 1

Solution:

1.)

	Appraised Value	Percent of Total Appraised Value	× Total Cost of Acquisition	= Apportioned Cost
Land	$189,000	45%($189,000/$420,000)	$336,960	$151,632
Land Improvement	$84,000	20%($84,000 /420,000)	$336,960	$67,392
Building	$147,000	35% ($147,000 /$420,000)	$336,960	$117,936
Total	$420,000	100%		$336,960

2.)

Journal entry:

Transaction	General Journal	Debit	Credit
1.	Land	$151,632
	Land Improvement	$67,392
	Building	$117,936
	Cash		$336,960
	( To record the cost of lump - sum purchase)