Jane Browning Purchased a Tract of Land and Contracted with a Builder

question 44

Short Answer

Jane Browning purchased a tract of land and contracted with a builder to build an office building on the property. She also engaged other contractors for lighting, fencing, paving, etc.
Based on the following transactions, determine the total costs allocated to the land, building, and land improvements accounts.
a)Purchased land for $125,000.
b)Paid a contractor $150,000 to design and build the office building.
c)Paid a demolition company $20,000 to remove an old structure on the property.
d)Paid $15,000 in delinquent taxes on the property.
e)Paid $20,000 for fencing.
f)Paid $10,000 for paving.
g)Paid an electrical contractor $15,000 for outdoor lighting.
Cost of land $\quad\quad\quad\quad\quad\quad ------$
Cost of building $\quad\quad\quad\quad\quad ------$
Cost of land improvements $\quad ------$

---

Definitions:

Cash Payments Journal

A financial journal that tracks all cash outlays of a business, including expenses, asset purchases, and debt repayments.

Cash Purchase

This term refers to a transaction where goods or services are bought and paid for with cash or cash equivalent immediately at the point of sale.

Supplies Recorded

This refers to the accounting practice of recognizing and recording office or operational supplies as expenses when they are used.

Cash Receipts Journal

A specialized accounting journal used to record all cash inflows or receipts of the business.