Question

Charleston Clothing purchased​ land, paying $ 110,000 cash and signing a $ 280,000 note payable. In​ addition, Charleston paid delinquent property tax of $ 1,400​, title insurance costing $ 650​, and $ 5,900 to level the land and remove an unwanted building. Record the journal entry for purchase of the land

Answer 1

Dr Land 397,950

Cr Cash 117,950

Cr Notes payable 280,000

Step-by-step explanation:

Certain ordinary and necessary costs can be included in the purchase cost of land:

• cost of the land
• title fees
• applicable taxes
• legal fees
• broker fees
• survey costs
• leveling costs
• zoning fees
• etc.

In this case, the total purchase cost of the land = $110,000 + $280,000 + $1,400 + $650 + $5,900 = $397,950