Suppose Emory University acquired a 20-acre parcel of land immediately adjacent to its existing facilities on January 2, 2012. The land included a warehouse, parking lots, and driveways. The university paid $800,000 cash and also gave a note for $3 million, payable at $300,000 per year plus interest of 5% on the outstanding balance.

The university demolished the warehouse at a cash cost of $150,000 so it could be replaced with a new classroom building. For construction of the building, the university made a cash down payment of $3 million and gave a mortgage note of $7 million. The mortgage was payable at $250,000 per year plus interest of 5% on the outstanding balance.

1. Calculate the cost that Emory University should add to its Land account and its Building account.

2. Prepare journal entries (without explanations) to record the preceding transactions.