Question

On January 1, 2019, Coopers Industries bought a parcel of land for use in its operations by paying the seller $100,000 in cash and signing a 5-year, 12 percent note payable in the amount of $400,000. In connection with the purchase of the land, Coopers incurred legal fees of $19,000, a real estate agent sales commission of $25,000, surveying fees of $1,000, and an appraisal fee of $5,000. The acquisition cost of the land is:___________

A. $131,000
B. $150,000
C. $531,000
D. $550,000

Answer 1

D. $550,000

Step-by-step explanation:

The computation of the cost of the land is shown below:

= Cash paid + note payable signed + legal fees incurred + real estate agent sales commission + surveying fees + an appraisal fee

= $100,000 + $400,000 + $19,000 + $25,000 + $1,000 + $5,000

= $550,000

For computing the cost of the land we simply added all the items given in the question