Presented below is information related to Blossom Company. 1. On July 6, Blossom

Question

Presented below is information related to Blossom Company.

1. On July 6, Blossom Company acquired the plant assets of Doonesbury Company, which had discontinued operations. The appraised value of the property is:

Land $372,000

Buildings 1,116,000

Equipment 744,000

Total $2,232,000

Blossom Company gave 12,500 shares of its $100 par value common stock in exchange. The stock had a market price of $171 per share on the date of the purchase of the property.

2. Blossom Company expended the following amounts in cash between July 6 and December 15, the date when it first occupied the building. (Prepare consolidated entry for all transactions below.)

Repairs to building $107,860

Construction of bases for equipment to be installed later 135,500

Driveways and parking lots 131,060

Remodeling of office space in building, including new partitions and walls 162,550

Special assessment by city on land 19,750

3. On December 20, the company paid cash for equipment, $274,800, subject to a 2% cash discount, and freight on equipment of $11,540.

Prepare entries on the books of Blossom Company for these transactions

Explanation / Answer

Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Land        356,250.00 Buildings    1,068,750.00 Equipment        712,500.00    Common Shares (12,500 Shares X $100)    1,250,000.00    Paid in Capital in Excess of Par (12,500 Shares X $71)        887,500.00 (To record the purcahse of assets in exchange of Shares) Fair Value Weight Allocated Amount Land        372,000.00 16.67%        356,250.00 Buildings    1,116,000.00 50.00%    1,068,750.00 Equipment        744,000.00 33.33%        712,500.00 Total    2,232,000.00    2,137,500.00 2 Buildings        270,410.00 Machinery & Equipment        135,500.00 Land Improvements        131,060.00 Land          19,750.00     Cash        556,720.00 (To record the cash paid for assets) 3 Machinery & Equipment        280,844.00     Cash        280,844.00 (To record the cash paid for Machinery) Cost of Machinery & Equipment = ($274,800 X 98%) + $11,540 (Freight Paid) Cost of Machinery & Equipment = $280,844

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