Question: 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.