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 $780,000, with a useful life of 20 years and a $70,000 salvage value. Land Improvements 1 is valued at $360,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,860,000. The company also incurs the following additional costs.

Cost to demolish Building 1 $ 346,400

Cost of additional land grading 189,400

Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value 2,262,000

Cost of new Land Improvements 2 having a 20-year useful life and no salvage value 168,000

Journal entry worksheet 1 Record the cost of the plant assets, paid in cash Note: Enter debits before credits. Date Credit General Journal Debit Land Jan 01