Determine Cost of Land Four Corners Delivery Company acquired an adjacent lot to construct a new warehouse, paying $200,000 and giving a short-term note for $375,000. Legal fees paid were $6,000, delinquent taxes assumed were $4,100, and fees paid to remove an old building from the land were $15,500. Materials salvaged from the demolition of the building were sold for $2,600. A contractor was paid $900,000 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.

$598,000

Explanation:

Calculation of the Cost of Land

Cash                                                                  $200,000

Note Payable                                                    $375,000

Legal fees                                                             $6,000

Delinquent taxes                                                  $4,100

Fees to Remove Old Building                           $15,500

Proceeds from Savages                                    ($2,600)

Total                                                                  $598,000

Therefore,

The cost of the land to be reported on the balance sheet is $598,000