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24 December, 19:12

Wilson Co. purchased land as a factory site for $900,000. Wilson paid $80,000 to tear down two buildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Architect's fees were $31,200. Title insurance cost $2,400, and liability insurance during construction cost $2,600. Excavation cost $10,440. The contractor was paid $2,800,000. An assessment made by the city for pavement was $6,400. Interest costs during construction were $170,000.

The cost of the land that should be recorded by Wilson Co. is

a. $989,880

b. $980,480

c $996,280

d. $986,880

The cost of the building should be recorded by Wilson Co. is

a. 2,804,840

b. 2,813,200

c. 2,803,800

d. 3,014,240

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Answers (1)
  1. 24 December, 22:39
    0
    Cost of the land = $980,480 (B)

    Cost of Building = $ 3,014,240 (D)

    Explanation:

    Cost of the Land : $

    Cost of factory site 900,000

    Cost of dismantling the building 80,000

    Proceeds from salvage sold (5,400)

    Title Insurance Cost 2400

    Legal fees for title investigation 3,480

    980,480

    Cost of the Building:

    Payment to Contractor 2,800,000

    Architect's fee 31,200

    Liability Insurance cost 2,600

    Excavation cost 10,440

    Interest cost 170,000

    3,014,240
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