In January 2018, 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 a $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:

Required information The following information applies to the questions displayed below In January 2018, 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 a $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 Cost of additional land grading Cost to construct new building (Building 3), having a useful life of 25 years $ 328,400 175,400 2,202,000 164,000 and a $392,000 salvage value Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value Required 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Appraised Value Percent of Total Total Cost of Acquisition Apportioned Cost Allocation of Purchase Price Land Building 2 Land Improvements 1 Totals 0% Land Building2 Building 3 Improvements 1 Improv ements 2 Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals 2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2018 View transaction list View journal entry worksheet No Date General Journal Debit Credit Jan 01 Land Building 2 Building 3 Land improvements 1 Land improvements 2 Cash 3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2018 when these assets were in use