Answered

Get the answers you need at Westonci.ca, where our expert community is dedicated to providing you with accurate information. Get quick and reliable answers to your questions from a dedicated community of professionals on our platform. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.

Rodriguez Company pays $342,225 for real estate with land, land improvements, and a building. Land is appraised at $245,000; land improvements are appraised at $73,500; and a building is appraised at $171,500. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase.

Sagot :

Answer and Explanation:

a. The allocation of the total cost among the three assets is given below:

                                      (a)                          (b)                      (a × b)  

      Appraise value      Total appraised      Total cost of      Apportioned

                                     value                                                          cost    

                                    Percentage              acquisition

Land  $245,000            50%                 $342,225                $171,112.50

Land

improvements $73,500  15%                $342,225               $51,333.75

Building $171,500          35%                $342,225               $119,778.75

Total      $490,000

b. The journal entry to record the purchase is given below:

Land   $171,112.50

Land improvements $51,333.75

Building $119,778.75

       To Cash $342,225

(To record the purchase)

Here the asset is debited as it rises the assets and cash is credited as it reduced the assets

Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.