The following costs were incurred by Shumway Company in purchasing land: cash price, $84,000; removal of old building, $5,200; legal fees, $3,000; clearing and grading, $3,500; installation of fence, $3,400.
(a) What is the cost of the land?
(b) What is the cost of the land improvements?
Plz help. I have exam coming on monday! THANKS.
Land: 84,000 + 3,000 = ?
Improvements: 5,200 + 3,500 + 3.400 = ?
Check your text to make sure that legal fees are included in the purchase of the land.
To find the cost of the land and the cost of the land improvements, you need to add up the relevant costs incurred by the Shumway Company.
(a) Cost of the land:
To determine the cost of the land, you need to consider the cash price of the land. In this case, the cash price of the land is $84,000.
Therefore, the cost of the land is $84,000.
(b) Cost of the land improvements:
To find the cost of the land improvements, you need to consider the costs related to the removal of the old building, legal fees, clearing and grading, and installation of the fence. In this case, the costs are as follows:
- Removal of old building: $5,200
- Legal fees: $3,000
- Clearing and grading: $3,500
- Installation of fence: $3,400
To find the cost of the land improvements, you need to add up these costs.
Cost of land improvements = Removal of old building + Legal fees + Clearing and grading + Installation of fence
Cost of land improvements = $5,200 + $3,000 + $3,500 + $3,400
Cost of land improvements = $14,100
Therefore, the cost of the land improvements is $14,100.
Remember, always carefully read the question and identify the relevant information provided. In this case, you were given the different costs incurred by the Shumway Company. By adding up these costs, you were able to find the cost of the land and the cost of the land improvements.