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Determining Cost of Land
On-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $36,000 in cash and giving a short-term note for $249,000. Legal fees paid were $2,340, delinquent taxes assumed were $11,200, and fees paid to remove an old building from the land were $16,400. Materials salvaged from the demolition of the building were sold for $4,300. A contractor was paid $866,400 to construct a new warehouse.
Problem 1: Determine the cost of the land to be reported on the balance sheet.
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