Charleston Clothing purchased land, paying $ 110,000 cash and signing a $ 280,000 note payable. In addition, Charleston paid delinquent property tax of $ 1,400 , title insurance costing $ 650 , and $ 5,900 to level the land and remove an unwanted building. Record the journal entry for purchase of the land

Dr Land 397,950

Cr Cash 117,950

Cr Notes payable 280,000

Explanation:

Certain ordinary and necessary costs can be included in the purchase cost of land:

cost of the land title fees applicable taxes legal fees broker fees survey costs leveling costs zoning fees etc.

In this case, the total purchase cost of the land = $110,000 + $280,000 + $1,400 + $650 + $5,900 = $397,950