Purchases

Previn Brothers Inc. purchased land at a price of $27,000. Closing costs $1,400. An old building was removed at a cost of $10,200. What amount should be recorded as the cost of the land ?

• $1,400

• $38,600

• $28,400

• $37,200

Chopra plc purchased a truck by issuing an $80,000, 4 year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligation of this nature is 10%. Prepare the journal entry to record the purchase of this truck.

• Dt Truck............$8,000

  Kt Notes Payable............$8,000

• Dt Notes Payable........$8,000

  Kt Truck.........$8,000

• Dt Truck............$80,000

  Kt Notes Payable............$80,000

• Dt Notes Payable........$80,000

  Kt Truck.........$80,000

Mohave Inc. purcahsed land, building and equipment from Laguna Corp. for a cash payment of $315,000. The estimated fair values of the assets are land $60,000, building $220,000 and equipment $80,000. At what amounts should each of the 3 assets be recorded ?

• Dt Land..........$52,500 Building.......$192,500

  Equipment........$70,000

  Kt Cash.......$315,000

• Dt Land..........$192,500 Building.......$52,500

  Equipment........$70,000

  Kt Cash.......$315,000

• Dt Land..........$60,000 Building.......$220,000

  Equipment........$80,000

  Kt Cash.......$360,000

• Dt Land..........$60,000 Building.......$185,000

  Equipment........$70,000

  Kt Cash.......$315,000