E12-11 (LO3) (Accounting for Goodwill) Fred Moss, owner of Moss Interiors, is negotiating for the purchase of Zweifel Galleries. The following balance sheet of Zweifel is given in an abbreviated form as follows.

ZWEIFEL GALLERIES

Balance Sheet

As of December 31, 2017

Assets Liabilities and Stockholders' Equity

Cash

$100,000

Accounts payable

$ 50,000

Land

70,000

Notes payable (long-term)

300,000

Buildings (net)

200,000

Total liabilities

350,000

Equipment (net)

175,000

Common stock

$200,000

Copyrights (net)

30,000

Retained earnings

25,000

225,000

Total assets

$575,000

Total liabilities and stockholders' equity

$575,000

Moss and Zweifel agree that:

1. Land is undervalued by $30,000.

2. Equipment is overvalued by $5,000.

Zweifel agrees to sell the gallery to Moss for $350,000.

Instructions

Prepare the entry to record the purchase of Zweifel Galleries on Moss's books.