[The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,750,000 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 $854,000, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $366,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,830,000. The company also incurs the following additional costs.

Cost to demolish Building 1	$ 339,400
Cost of additional land grading	191,400
Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value	2,202,000
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value	168,000

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[The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,750,000 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 $854,000, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $366,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,830,000. The company also incurs the following additional costs.

Cost to demolish Building 1	$ 339,400
Cost of additional land grading	191,400
Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value	2,202,000
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value	168,000

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.