For each of the following six entries, Calculate the amounts that Chucks Steakhouse should include in the Land account and in the Building account, in other words two entries for each of the 6 entries.

Practice Problem

Chuck’s Steakhouse opened a new restaurant on the site of an existing building. It paid the owner $260,000 for the land and building, of which it attributes $52,000 to the land and $208,000 to the building. Chuck’s incurred legal costs of $12,600 to conduct a title search and prepare the necessary legal documents for the purchase. It then paid $35,900 to renovate the building to make it suitable for Chuck’s use. Property and liability insurance on the land and building for the first year was $12,000, of which $4,000 applied to the period during renovation and $8,000 applied to the period after opening. Property taxes on the land and building for the first year totaled $15,000, of which $5,000 applied to the period during renovation and $10,000 applied to the period after opening.

For each of the following six entries, Calculate the amounts that Chucks Steakhouse should include in the Land account and in the Building account, in other words two entries for each of the 6 entries.

If an amount box does not require an entry, enter “0”.

1.Purchase Price of Land and Building

2.Legal Costs

3.Renovation Costs

4.Property and Liability Insurance Costs during renovation

5.Property Taxes During Renovation

6.Total

All of the above should be calculated separately for Land and Building

Thank you in advance

 

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