Determining Cost of Land Fastball Delivery Company acquired an adjacent lot to c

Question

Determining Cost of Land Fastball Delivery Company acquired an adjacent lot to construct a new warehouse, paying $36,000 and giving a short-term note for $321,000. Legal fees paid were $2,105, delinquent taxes assumed were $10,000, and fees paid to remove an old building from the land were $21,400. Materials salvaged from the demolition of the building were sold for $5,400. A contractor was paid $1,085,300 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.

Determining Cost of Land Fastball Delivery Company acquired an adjacent lot to construct a new warehouse, paying $36,000 and giving a short-term note for $321,000. Legal fees paid were $2,105 delinquent taxes assumed were $10,000, and fees paid to remove an old building from the land were $21,400. Materials salvaged from the demolition of the building were sold for $5,400. A contractor was paid $1,085,300 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.

Explanation / Answer

Land purchase price (321,000 +36,000) =

Land purchase price (321,000 +36,000) =

$357,000 Add: Legal fees $2,105 Add: Delinquent tax $10,000 Add: Removal costs $21,400 Less: materials salvaged and sold ($5,400) Total cost of land on balance sheet $385,105

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