In January 2005, Keona Co. pays $2,800,000 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 ap¬ praised at $641,300, with a useful life of 20 years and an $80,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $408,100 that are expected to last another 14 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,865,600. Keona also incurs the following additional costs:

Required 1. Prepare a table with the following column headings: Land, Building 2, Building 3, Land Improvements 1, and Land Improvements 2. Allocate the costs incurred by Keona to the appro¬ priate columns and total each column (round percents to the nearest 1%).
2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2005.
3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2005 when these assets were in use.

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Cost to demolish Building | Cost of additional land grading Cost to construct new building (Building 3), having a useful life of 25 years and a $390,100 salvage value Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value. $ 422,600 167,200 2,019,000 158,000