A Company Needed a New Building Prepare a Single Journal Entry to Record the Above Costs

question 97

Essay

A company needed a new building. It found a suitable location with an existing old building on the land. The company reached an agreement to buy the land and the building for $960,000 cash. The old building was demolished to make way for the needed new building. Following is information regarding the demolition of the old building and construction of the new one:
$\begin{array}{|l|r|}\hline \begin{array}{l}\text { Construction cost of new building including } \$ 660,000 \\\text { for parking lot }\end{array} & \$ 9,560,000 \\\hline \text { Demolition of old building } & 300,000 \\\hline \text { Proceeds from sale of salvaged materials from old building } & 120,000 \\\hline\end{array}$ Prepare a single journal entry to record the above costs assuming all transactions are paid in cash.

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Definitions:

Create Purchase Order

The process of generating a document that authorizes a purchase transaction for goods or services from a supplier.

Vendor Transaction

A financial exchange or deal occurring between a business and a vendor, often related to the purchase of goods or services.

Receive Inventory

The process of accepting and documenting the arrival of goods or materials into a warehouse or storage facility.

Create Sales Receipt

A document that records a transaction where payment is received at the point of sale.