On March 1, 2006, Tanager Resorts acquired real estate on which it planned to construct a small…

On March 1, 2006, Tanager Resorts acquired real estate on which it planned to construct a small bed-and-breakfast. The company paid $90,000 in cash. An old warehouse on the property was razed at a cost of $6,600; the salvaged materials were sold for $1,700. Additional expenditures before construction began included $1,100 attorney’s fee for work concerning the land purchase, $5,000 real estate broker’s fee, $7,800 architect’s fee, and $14,000 to put in driveway and a parking lot.

Instructions

(a) Determine the amount to be reported as the cost of the land.

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(b) For each cost not used in part (a), indicate the account to be debited.

 

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