Question: Cala Manufacturing purchases a large lot on which an old
Cala Manufacturing purchases a large lot on which an old building is located as part of its plans to build a new plant. The negotiated purchase price is $ 280,000 for the lot plus $ 110,000 for the old building. The company pays $ 33,500 to tear down the old building and $ 47,000 to fill and level the lot. It also pays a total of $ 1,540,000 in construction costs — this amount consists of $ 1,452,200 for the new building and $ 87,800 for lighting and paving a parking area next to the building. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.
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