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Rodriguez Company pays $336,960 for real estate with land, land improvements, and a building. Land is appraised at $216,000; land improvements are appraised at $81,000; and a building is appraised at $243,000. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase.

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opudodennis

Answer:

Land=$134,784

Land Improvements=$50,544

Building=$151,632

Step-by-step explanation:

-We calculate the proportion of each itemized activity:

[tex]Land=\frac{216000}{540000}\\\\=0.4\\\\Land \ Improvements=\frac{81000}{540000}\\\\=0.15\\\\\\Building=1-(0.40+0.15)\\\\=0.45[/tex]

#We use these proportions to calculate the individual cost allocation as follows:

Land=336960*0.4= $134,784

Land Improvements=0336960*0.15= $50,544

Buildings=336960*0.45= $151,632

#We then used this values to form our journal entry as attached.

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