Prepare a single journal entry to record all incurred cost

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In January 2013, Mitzu Co. pays $2,600,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $644,000, with a useful life of 20 years and an $60,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $420,000 that are expected to last another 12 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,736,000. The company also incurs the following additional costs:  

Cost to demolish Building 1 $ 328,400  
  Cost of additional land grading   175,400  
  Cost to construct new building (Building 3), having a useful life of 25 years and a $392,000 salvage value   2,202,000  
  Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value   164,000  
  Total costs $

5,469,800  

Allocate the costs incurred by Mitzu to the appropriate columns and total each column

Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2013.

Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2013 when these assets were in use.

Reference no: EM131791942

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