Question

Cala Manufacturing purchases land for $461,000 as part of Its plans to build a new plant. The company pays $38,500 to tear down an old bullding on the lot and $56,913 to fill and level the lot It also pays construction costs of $1,373,900 for the new bullding and $86,725 for lighting and paving a parking area. Prepare a single journal entry to record these costs Incurred by Cala, all of which are paid in cash. Journal entry worksheet

Answer 1

The question is related to accounting, where the student needs to create a journal entry to record the costs incurred in the purchase and preparation of land, and construction of new facilities, all paid in cash.

Step-by-step explanation:

The student is asking for assistance in preparing a journal entry to record various costs incurred by Cala Manufacturing related to the acquisition and preparation of land for constructing a new plant, and the construction costs of the plant itself along with additional improvements, all of which were paid for in cash.

The journal entry would combine all of these expenses into one transaction and would look like this:

• Land 517,413 (461,000 + 38,500 + 17,913 from leveling)
• Building 1,373,900
• Land Improvements 86,725
• Cash 1,977,938 (Total of all costs)

The costs paid for tearing down an old building and filling and leveling are capitalized as part of the land cost. Construction costs are capitalized as building cost, and the costs for lighting and paving are recorded as land improvements. All costs are then offset by the cash payment made for these transactions.

Answer 2

To record the costs incurred by Cala Manufacturing for the new plant, a single journal entry is prepared, debiting various expense accounts and crediting the cash account.

Step-by-step explanation:

The journal entry to record the costs incurred by Cala Manufacturing can be prepared as follows:

1. Debit Land $461,000
2. Debit Building Demolition Expense $38,500
3. Debit Fill and Leveling Expense $56,913
4. Debit Construction Costs $1,373,900
5. Debit Lighting and Paving Expense $86,725
6. Credit Cash $1,917,038

The journal entry debits the relevant expense accounts and credits the cash account to show the cash outflow. The total debits equal the total credits, ensuring the journal entry is balanced.