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On April 1, Renfro Corporation purchased for $765,000 a tract of land on which was located a warehouse and an office building. The following information is available concerning the property purchased:
What are the appropriate amounts that Renfro should record in its balance sheet as the cost of the land, warehouse, and office building, respectively?
a. land $255,000; warehouse $155,000; office building $355,000
b. land $273,214; warehouse $163,929; office building $327,857
c. land $300,000; warehouse $200,000; office building $400,000
d. land $255,000; warehouse $170,000; office building $340,000
e. land $345,000; warehouse $230,000; office building $460,000
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Our tutors have indicated that to solve this problem you will need to apply the Basket (Lump-sum) Purchases concept. You can view video lessons to learn Basket (Lump-sum) Purchases. Or if you need more Basket (Lump-sum) Purchases practice, you can also practice Basket (Lump-sum) Purchases practice problems.
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Based on our data, we think this problem is relevant for Professor Smith's class at OSU.