Question 1) On March 1, 2017, Amanda Company acquired real estate, on which it p

Question

Question 1) On March 1, 2017, Amanda Company acquired real estate, on which it planned to construct a small office building, by paying $88,000 in cash. An old warehouse on the property was demolished at a cost of $8,888; the salvaged materials were sold for $1,777. Additional expenditures before construction began included $1,009 attorney's fee for work concerning the land purchase, S5,200 real estate broker's fee, $9,100 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) For each cost not used in part (a), indicate the account to be debited.

Explanation / Answer

a)Cost of land : 101320

b)Building ;9100

Land improvements :14000

Land Building Land improvements Purchase cost 88000 Demoilition cost 8888 less:salvage -1777 Attroney fee 1009 Broker fee 5200 Architect fee 9100 parking lot 14000 Total cost 101320 9100 14000

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