Exercise 12-11 Fred Moss, owner of Moss Interiors, is negotiating for the purcha

Question

Exercise 12-11 Fred Moss, owner of Moss Interiors, is negotiating for the purchase of Cullumber Galleries. The balance sheet of Cullumber is givern in an abbreviated form belovw CULLUMBER GALLERIES BALANCE SHEET AS OF DECEMBER 31, 2017 Assets Liabilities and Stockholders' Equity Accounts payable Notes payable (long-term) Cash Land Buildings (net) Equipment (nt) 174,700Common stock Copyrights (net) Total assets $102,000 69,700 199,700 $50,400 300,100 350,500 Total liabilities $201,300 29,700 Retained earnings 24,000 225,300 $575,800 Total liabilities and stockholders' equity $575,800 Moss and Cullumber agree that: 1. Land is undervalued by $37,100 2. Equipment is overvalued by $4,800 Cullumber agrees to sell the gallery to Moss for $380,000 Prepare the entry to record the purchase of Cullumber Galleries on Moss's books. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit

Explanation / Answer

Journal entry to record the purchase of Cullumber Galleries on Moss's books Account Titles and Explanation Debit Credit Cash $102,000.00 Land $32,600.00 Buildings (net) $199,700.00 Equipment (net) $179,500.00 Copyrights (net) $29,700.00 Goodwill (balancing figure) $187,000.00 Accounts Payable $50,400.00 Notes Payable (long term) $300,100.00 Cash $380,000.00 (to record purchase of Cullumber Galleries assets and liabilities)

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