A Company Purchased Property for $100,000

question 86

Multiple Choice

A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $62,000; the land at $35,000, and the parking lot at $18,000. Land should be recorded in the accounting records with an allocated cost of:

• A) $0.
• B) $100,000.
• C) $35,000.
• D) $30,435.
• E) $46,087.

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Definitions:

Revenue Accounts

Accounts that track the income earned from the sale of goods and services, or the increase in equity resulting from the operations of an organization.

Owner's Capital Account

An account on a company's balance sheet that represents the owner's invested capital plus retained earnings minus withdrawals.

Balance Sheet Accounts

Accounts that reflect the financial position of a company at a specific point in time, including assets, liabilities, and shareholders' equity.

Closing Entry Process

The procedure used at the end of an accounting period to transfer balances from temporary accounts to permanent accounts, clearing the temporary accounts for the next period.