Shahia Company bought a building for $86,000 cash and the land on which it was located for $113,000 cash. The company paid transfer costs of $15,000 ($3,000 for the building and $12,000 for the land). Renovation costs on the building were $33,000.

Required information

Required:

1. Prepare the journal entry to record the purchase of the property, including all relevant expenditures. Assume that all transactions were for cash and that all purchases occurred at the start of the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Question

Donna Matthews

Business

18 February, 14:30

Shahia Company bought a building for $86,000 cash and the land on which it was located for $113,000 cash. The company paid transfer costs of $15,000 ($3,000 for the building and $12,000 for the land). Renovation costs on the building were $33,000.

Required information

Required:

1. Prepare the journal entry to record the purchase of the property, including all relevant expenditures. Assume that all transactions were for cash and that all purchases occurred at the start of the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Answers (1)

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Margaret Larson · Answer 1

1. The journal entry is shown below:

Building A/c Dr $122,000

Land A/c Dr $125,000

To Cash A/c $247,000

(Being the purchase of property is recorded)

The computations are shown below:

For Land:

= Purchase price of land + transfer cost

= $113,000 + $12,000

= $125,000

For building:

= Purchase price of land + transfer cost + renovation cost

= $86,000 + $3,000 + $33,000

= $122,000