Question

Cala Manufacturing purchases land for $411,000 as part of its plans to build a new plant. The company pays $30,500 to tear down an old building on the lot and $45,087 to fill and level the lot. It also pays construction costs $1,726,400 for the new building and $108,976 for lighting and paving a parking area. Prepare a single journal entry to record the costs incurred by Cala, all of which are paid in cash.

Answer 1

Date General journal Debit Credit

Land $486,587

($411,000+$30,500+$45,087)

Land improvements $108,976

Building $1,726,400

Cash $2,321,963