49.6k views
5 votes
Rodriguez Company pays $352,755 for real estate with land, land improvements, and a building. Land is appraised at $250,000; land improvements are appraised at $50,000; and a building is appraised at $200,000. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase.

User Thellimist
by
8.4k points

1 Answer

1 vote

Answer and Explanation:

The computation and the journal entry is shown below;

a. The allocation of the total cost among the three assets is shown below:

(a) (b) (a × b)

Appraise value Total appraised Total cost of Apportioned

value cost

Percentage acquisition

Land $250,000 50% $352,755 $176,377.5

Land

improvemnts $50,000 10% $352,755 $35,275.5

Building $200,000 40% $352,755 $141,102

Total $500,000

b. The journal entry to record the purchase is shown below:

Land $176,377.5

Land improvements $35,275.5

Building $141,102

To Cash $352,755

(To record the purchase)

The asset is debited as it rise the assets and cash is credited as it decreased the assets

User Ah Bon
by
7.4k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.