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

Recording the Initial Cost of Land

When Fresh Veggies, Incorporated (FVI) purchases land and a warehouse for $490,000, the company needs to record the initial cost of the land in its accounting records. This involves accounting for both the purchase price of the land and any additional costs incurred.

The journal entry to record the initial cost of land for FVI would be as follows:

Date: [Date of Purchase]

Land [or Property, depending on the account name] - $490,000

Cash [or Accounts Payable, if purchased on credit] - $490,000

Explanation: This entry reflects the initial cost of land purchased by FVI for $490,000.

It's worth noting that any additional costs incurred, such as legal fees, title transfer fees, or other related expenses, would typically be included in the cost of the land. This journal entry establishes the initial cost of the land as an asset on FVI's balance sheet, representing the acquisition of the land for future use or development.