E12-12B (L01,2,3) (Accounting for Goodwill) On July 1, 2017, Aeroplus Corporation purchased Johnson Company by paying $187,500 cash and issuing a $65,000 note payable to Steve Johnson. At July 1, 2017, the balance sheet of Johnson Company was as follows.

The recorded amounts all approximate current values except for land (worth $45,000), inventory (worth $93,750), and copyrights (worth $11,250).

Instructions

(a) Prepare the July 1 entry for Aeroplus Corporation to record the purchase.

(b) Prepare the December 31 entry for Aeroplus Corporation to record amortization of intangibles. The copyrights have an estimated useful life of 4 years with a residual value of $2,450.

$38,500 66,500 75,000 30,000 56,250 Accounts payable Stockholders' equity $160,000 166,250 326,250 Cash Receivables Inventory Land Buildings (net) Equipment (net) Copyrights 7,500 $326,250