Honey Crisp Co Needed a New Building, and Found a Suitable

question 43

Essay

Honey Crisp Co needed a new building, and found a suitable piece of land which had an old building on it. Honey Crisp made an agreement to buy the land and the building for $860,000 cash. The old building was demolished to make way for the new building. The following is information regarding the demolishing of the old building and construction of the new one:
$$\begin{array} { | l | c | } \hline \begin{array} { l } \text { Cost of construction of new building, } \\\text { including } \$ 600,000 \text { for a parking lot }\end{array} & 5,260,000 \\\hline \text { Denolition of old building } & 150,000 \\\hline \text { Proceeds from salvage materials } & 20,000 \\\hline\end{array}$$ Prepare a single journal entry to record the above cost (assume paid cash).

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Definitions:

MRP

Marginal Revenue Product, a term in economics that represents the additional revenue generated by employing one more unit of a factor, such as labor or capital.

Investment

The allocation of resources, such as capital or time, in order to generate future profit or income.

Usury Laws

Statutes that set maximum interest rates that can be charged on loans, intended to protect consumers from excessively high rates.

Interest Rates

The cost of borrowing money or the return on investment, typically expressed as a percentage of the principal.