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 $203,000 for the lot plus $98,000 for the old building. The company pays $27,300 to tear down the old building and $40,356 to fill and level the lot. It also pays a total of $1,812,518 in construction costs-this amount consists of $1,704,900 for the new building and $107,618 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 View transaction list Journal entry worksheet 1 Record the total costs of the plant assets.

Answer 1

The journal entry for the cost incurred by Cala and are paid in cash is as follows:

Date	Account and Explanation	Debit($)	Credit($)
1	Land ($203,000 + $98,000 + $27,300 + $40,356)	368,656
	Land Improvement	107,618
	Buildings	1,704,900
	Cash		2,181,174
	(Recorded the Land,Land Improvement and Buildings)