In January 2013, Mitzu Co. pays $2,650,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $823,500, with a useful life of 20 years and an $75,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $305,000 that are expected to last another 10 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,921,500. The company also incurs the following additional costs:

Cost to demolish Building 1 - $346,400 

Cost of additional land grading - 189,400 

Cost to construct new building (Building 3), having a useful life of 25 years and a $402,000 salvage value - 2,222,000 

Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value - 173,000 

Total costs - 7,965,799 

2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2013.

Journal Entry Worksheet-

A. Record the costs of the plant assets.

Journal Entry Worksheet

Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2013 when these assets were in use.

A. Record the year-end adjusting entry for the depreciation expense of Building 2.

B. Record the year-end adjusting entry for the depreciation expense of Building 3.

C. Record the year-end adjusting entry for the depreciation expense of Land Improvements 1

D. Record the year-end adjusting entry for the depreciation expense of Land Improvements 2.