Required information

[The following information applies to the questions displayed below.]

In January 2017, Mitzu Co. pays $2,700,000 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 $854,000, with a useful life of 20 years and a $75,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $396,500 that are expected to last another 13 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,799,500. The company also incurs the following additional costs:

Cost to demolish Building 1	$	343,400
Cost of additional land grading		195,400
Cost to construct new building (Building 3), having a useful life of 25 years and a $402,000 salvage value		2,302,000
Cost of new land improvements (Land Improvements 2) near Building 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.

Percent of Total cost of Appraised Value Total Allocation of purchase price Apportioned Cost X Appraised Value acquisition Land X Building 2 X Land Improvements 1 X Totals Land Land Land Building 2 Building 3 Improvements 1 Improvements 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, 2017 View transaction list Journal entry worksheet 1 Record the cost of the plant assets, paid in cash Note: Enter debits before credits. General Journal Date Debit Credit Jan 01 Record entry Clear entry View general journal 3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2017 when these assets were in use. View transaction list Journal entry worksheet 1 2 3 Record the year-end adjusting entry for the depreciation expense of Building 2. Note: Enter debits before credits. Date General Journal Debit Credit Dec 31 View general journal Record entry Clear entry