On August 1, 2021, Mark Leamington Engineering Paid $ 1,000,000

question 71

Essay

On August 1, 2021, Mark Leamington Engineering paid $ 1,000,000 in a lump-sum purchase of land, building, and equipment. The payment consisted of $ 200,000 cash and a note payable for the balance. An appraisal revealed the following fair values at the time of the purchase:
Land $ 500,000
Building 450,000
Equipment 250,000
Instructions
Prepare the necessary journal entry to record this lump-sum purchase (round all percentage calculations to two decimal places).

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Definitions:

Inflation

A general increase in prices and fall in the purchasing value of money over time.

Bureau of Labor Statistics

A United States government agency that collects, processes, and disseminates essential statistical data about labor markets, employment, and inflation.

GDP Deflator

The GDP Deflator is a measure of the price level of all domestically produced goods and services in a country, used to adjust nominal GDP to real GDP.

Nominal Interest Rate

The percentage increase in money you pay the lender for the use of the money you borrowed, not adjusted for inflation.