Determining the Cost of Land for Fresh Veggies, Incorporated (FVI)

Expenses Related to the Acquisition:

1. Purchase Price: $520,000

2. Broker's Commission: $32,000

3. Title Insurance: $2,200

4. Miscellaneous Closing Costs: $6,400

5. Demolition Cost of Warehouse: $32,000

Cost of the Land Calculation:

The cost of the land for Fresh Veggies, Incorporated (FVI) is determined by adding the purchase price and all related expenditures. The total cost is calculated as follows:

Cost of Land = Purchase Price + Broker's Commission + Title Insurance + Miscellaneous Closing Costs

= $520,000 + $32,000 + $2,200 + $6,400

= $562,600

The cost of demolishing the warehouse is $32,000, but it is not added to the land cost as it is related to the demolition of the warehouse, not the acquisition of the land.

Journal Entry for the Land Purchase:

To record the purchase, the following journal entry should be made:

Land: $562,600

Cash: $562,600

This entry indicates that cash was paid for the land and all related expenditures.