Question

1).

Alpine Clothing purchased land, paying $110,000 cash and signing a $210,000 note payable. In addition, Alpine paid delinquent property tax of $1,700, title insurance costing $1,550, and $4,200 to level the land and remove an unwanted building. Record the journal entry for purchase of the land. Begin by determining the cost of the land. Purchase price of land Add related costs: Total cost of land

Answer 1

$ 3,20,000.00 Being by Determined the cost of the Land Purchase Price of the Land ($110,000+210,000) Add: Related Costs Deliquent Property Tax Title Insurance Leveling & Removing Unwanted Buildings Total Cost of Land $ $ $ 1,700.00 1,550.00 4,200.00 $ 7,450.00 $ 3,27,450.00 Credit The journal entry to record this purchase would be: Date Accounts and Explanation Debit Land $ 3,27,450.00 Cash Account Note Payable (Being Land purchased against Cash & Note Payable) $ 1,17,450.00 $ 2,10,000.00 Note- At the time of Purchase of Fixed Asset, the incidental cost which is necessary for the acquisition of such assets should be capitalised. Therefore, the above incurred expense will be capitalised as cost of Land acquired.