On January 1, Mitzu Co. pays a lump-sum amount of $2,700,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $796,500, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $295,000 and is expected to last another 10 years with no salvage value. The land is valued at $1,858,500. The company also incurs the following additional costs.

Cost to demolish Building 1	$	338,400
Cost of additional land grading		191,400
Cost to construct Building 3, having a useful life of 25 years and a $402,000 salvage value		2,242,000
Cost of new Land Improvements 2 having a 20-year useful life and no salvage value		173,000

Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column.

2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1. 3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first year these assets were in use.