Fred Moss, owner of Moss Interiors, is negotiating for the purchase of Sandhill
ID: 2588210 • Letter: F
Question
Fred Moss, owner of Moss Interiors, is negotiating for the purchase of Sandhill Galleries. The balance sheet of Sandhill is given in an abbreviated form below.
SANDHILL GALLERIES
BALANCE SHEET
AS OF DECEMBER 31, 2017
Assets
Liabilities and Stockholders’ Equity
$109,000
$50,700
70,400
301,700
200,400
352,400
175,400
$230,600
30,400
2,600
233,200
$585,600
$585,600
Moss and Sandhill agree that:
Sandhill agrees to sell the gallery to Moss for $381,500.
Prepare the entry to record the purchase of Sandhill Galleries on Moss’s books.
SANDHILL GALLERIES
BALANCE SHEET
AS OF DECEMBER 31, 2017
Assets
Liabilities and Stockholders’ Equity
Cash$109,000
Accounts payable$50,700
Land70,400
Notes payable (long-term)301,700
Buildings (net)200,400
Total liabilities352,400
Equipment (net)175,400
Common stock$230,600
Copyrights (net)30,400
Retained earnings2,600
233,200
Total assets$585,600
Total liabilities and stockholders’ equity$585,600
Explanation / Answer
Working:
Entry to record purchase of Sandhill Galleries Account Title Debit Credit Cash 109000 Land 108200 Building, net 200400 Equipment, net 170500 Copyright, net 30400 Goodwill 115400 Accounts payable 50700 Notes payable (long-term) 301700 Cash 381500 Acquisition value for land 108200 (70,400 + 37,800) Acquisition value for equipment 170500 (175,400 - 4,900)Related Questions
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