1. On July 1, 2015, Griffey Corporation purchased Johnson Company by paying $287,500 cash and issuing a $75,000 note payable to Steve Johnson. At July 1, 2015, the balance sheet of Johnson Company was as follows.

Cash $ 37,500 Accounts payable $150,000

Receivables 67,500 Mortgage Payable 225,000

Office Supplies 3,500 Common Stock 125,000

Inventory 75,000 Treasury Stock (2,500)

Land 135,000 Retained Earnings 35,300

Buildings 156,250 Total Liabilities and Equity $532,800

Accum. Depr Bld (36,500)

Equipment 152,500

Accum. Depr Equip (65,450)

Copyrights 7,500

Total Assets $532,800

The recorded amounts all approximate current (market and book) values except for land (worth $145,000), inventory (worth $93,750), and copyrights (worth $11,250).

Hint: Accumulated depreciation does not carry forward subtract from related asset to obtain book value.

Instructions

Prepare the July 1 entry for Griffey Corporation to record the purchase.