HighlandHighland Clothing purchased land, paying $ 96 comma 000$96,000 cash and signing a $ 300 comma 000$300,000 note payable. In addition, HighlandHighland paid delinquent property tax of $ 1 comma 100$1,100 , title insurance costing $ 600$600 , and $ 4 comma 600$4,600 to level the land and remove an unwanted building. Record the journal entry for purchase of the land.

Question

Camille Singleton

Business

16 July, 23:44

HighlandHighland Clothing purchased land, paying $ 96 comma 000$96,000 cash and signing a $ 300 comma 000$300,000 note payable. In addition, HighlandHighland paid delinquent property tax of $ 1 comma 100$1,100 , title insurance costing $ 600$600 , and $ 4 comma 600$4,600 to level the land and remove an unwanted building. Record the journal entry for purchase of the land.

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Kristina Hensley · Answer 1

Land 404,100 debit

Cash 104,100 credit

Note payable 300,000 credit

---to record the acquisition of land.--

Explanation:

The land will enter the accounting as the sum of all necessary cost incurred to acquired and leave it ready to use. The delinquent property tax are part of thecost to get the land. Same is true or the insurance and removing the nwanted building. All these are required to get the land ready for use