Problen 1. On March 1, 2018, Geoffrey Company acquired real estate, on which it

ID: 2550971 • Letter: P

Question

Problen 1. On March 1, 2018, Geoffrey Company acquired real estate, on which it planned to construct a small office building, by paying $90,000 in cash. An old warehouse on the property was demolished at a cost of S 8,200; the salvaged materials were sold for $1,700. (SO 1) Additional expenditures before construction began included $1,500 attorney's fee for work concernin architect's fee, and $14,000 to put in driveways and a parking lot. Instructions (a) Determine the amount to be reported as the cost of the land. (b) Make the journal entry to record the purchase of the land. g the land purchase, $5,000 real estate broker's fee, $9,100 (c) For each cost not used in part (a), indicate the account to be debited.

Explanation / Answer

Answer:

Determine the amount to be reported as the cost of the land.

Purchase real estate

90,000

Old warehouse razed at a cost

8,200

Salvaged materials were sold

(1,700)

Attorney Fee

1,500

Broker Fee

5,000

Cost of Land

103,000

Cost of the land is = $103,000

___________________________________________

Description

Debit $

Credit $

Land

103,000

Cash

103,000

___________________________________________

Type of Fee

Amount

Account to Debit

Architect Fee

9,100

Building

Driveways and a parking lot

14,000

Land Improvement