Property, Plant, and Equipment Exercise

  In a Word document, complete the following assignments: A. Smokey Mountain Furniture Company (SMFC) is looking to expand its operation into eastern Tennessee. Plans include the purchase of a 5-acre lot in a commercial district. The asking price for the parcel of land was $7.5 million, and SMFC made an offer of $4.5 million, which was accepted by the seller. At closing, SMFC paid $1.5 million in cash and issued a 48-month note payable for $4.25 million. The property contains about 3 acres of timber, which the company plans to cut and sell. The clearing of the property cost $20,000. A local lumber yard offered SMFC $12,000 for the cut trees. A portion of the land had been used as a dump site for trash and equipment, which had to be hauled off the property at a cost of $1,800. Fill dirt was then added to the property to meet local building codes at a cost of $75,000. Roads and paving for parking were installed at a cost of $350,000. A building was then erected on the property for $1.25 million, along with an adjacent parking garage for $450,000. SMFC retained a lawyer, which cost $2,500 in fees, to oversee the closing process for the purchase of the land. Please determine the cost of the land to be entered in the company's records.