Plant acquisitions for selected companies are presented below.
1. Protex Inc. acquired land, buildings, and equipment from a bankrupt company, for a lump-sum price of $700,000. At the time of purchase, the assets had the following book and appraisal values.

To be conservative, the company decided to take the lower of the two values for each asset acquired.
The following entry was made.

2. Apple Industries purchased store equipment by making a $10,000 cash down payment and signing a 2-year, $40,000, 8% note payable. The purchase was recorded as follows.

3. Cherry Company purchased office equipment for $50,000, terms 1/10, n/30. Because the company intended to take the discount, it made no entry until it paid for the acquisition. The entry was:

4. Bubble Inc. recently received at zero cost land from the Village of Wellington as an inducement to locate its business in the Village. The appraised value of the land is $120,000. The company made no entry to record the land because it had no cost basis.
5. Gump Company built a factory for $750,000. It could have purchased the building for $900,000.
The controller made the following entry.

Instructions
Prepare the entry that should have been made at the date of eachacquisition.

Transcribed Image Text:

Land Buildings Equipment Book Values $200,000 450,000 300,000 Appralsal Values $300,000 250,000 250,000 Land Buildings Equipment 200,000 250,000 250,000 Cash 700,000 Store Equipment 56,400 Cash Note Payable Interest Payable 10,000 40,000 6,400 Office Equipment 50,000 Cash Purchase Discounts 49,500 500 Warehouse 900,000 Cash Profit on Construction 750,000 150,000