Determine the amount to be reported as the cost of the land

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Question - On July 1, 2020, Preston Tucker and Sons Automobile Company acquired real estate to construct a small combination office and warehouse building. Tucker paid $125,000 cash as a down payment and issued a $375,000 note payable; the note is due in 3 years with an interest rate of 6.75%.

An old warehouse on the property was demolished at a cost of $12,835; the salvaged materials from the old warehouse were sold for $1,100. Additional expenditures before construction began, included: $2,250 for attorney fees pertaining to the real estate purchase, $4,800 for real estate broker's fee, $7,375 architect fees for designing plans for the new office and warehouse, and $14,000 to put in driveways and a parking lot.

Required -

(a) Determine the amount to be reported as the cost of the land.

(b) For each cost not used in part (a), indicate the account to be debited. Show all calculations.

Reference no: EM133188143

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