Italian Pizza Company purchased land as a factory site for $80,000. Prior to construction of the new building, the land had to be cleared of trees and brush. Construction costs incurred during the first year are listed below:
Land clearing costs ..................................................$ 4,000
Sale of firewood to a worker .........................................(500)
Architect fees (for new building) ..................................20,000
Title investigation of land ............................................2,500
Property taxes on land (for the first year) ..........................2,000
Building construction costs .......................................300,000
Required:
Determine the amounts that the company should record in the Land and the New Building accounts.