Determining the Cost of Land for FVI

The expenditures related to the acquisition of land and a warehouse by Fresh Veggies, Incorporated (FVI) are as follows:

• 1. Purchase price of land and warehouse: $490,000
• 2. Broker's commission: $29,000
• 3. Title insurance: $1,900
• 4. Miscellaneous closing costs: $6,000
• 5. Demolition cost of warehouse: $29,000

Determining the Cost of Land for FVI

Fresh Veggies, Incorporated (FVI) purchased land and a warehouse for $490,000. In addition to the purchase price, FVI incurred several expenditures related to the acquisition:

Broker's Commission: $29,000

Title Insurance: $1,900

Miscellaneous Closing Costs: $6,000

The warehouse was immediately demolished at a cost of $29,000. The total additional expenditures amount to $66,900. To determine the cost of the land, we need to add the purchase price and the additional expenditures:

Purchase Price: $490,000

Additional Expenditures: $66,900

Therefore, the cost of the land for FVI is $556,900. This amount should be recorded in the journal entry by debiting the Land account and crediting the Cash account, assuming cash was paid for all expenditures.