Question

On-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $38,000 and giving a short-term note for $243,000. Legal fees paid were $1,960, delinquent taxes assumed were 10 and fees paid to remove an old building from the land were $17,700. Materials salvaged from the demolition of the building were sold for $4,200. A contractor was paid $854,200 to construct a new мате

Determine the cost of the land to be reported on the balance sheet

Answer 1

The cost of the land to be reported on the balance sheet is $296,470.

Step-by-step explanation:

The cost of the land to be reported on the balance sheet can be calculated by adding up all the costs associated with acquiring and preparing the land. In this case, the costs include the purchase price of $38,000, the value of the short-term note of $243,000, legal fees of $1,960, delinquent taxes of $10, and fees paid to remove the old building of $17,700. The salvage value of the materials sold for $4,200 is subtracted from the total cost. The contractor's payment of $854,200 for constructing the new warehouse is not included in the cost of the land.

The calculation is as follows:

Total Cost of Land = Purchase Price + Short-term Note + Legal Fees + Delinquent Taxes + Fees to Remove Building - Salvage Value

Total Cost of Land = $38,000 + $243,000 + $1,960 + $10 + $17,700 - $4,200

Total Cost of Land = $296,470