Question
Kevin Moss, owner of Moss Interiors, is negotiating for the purchase of Wildhorse Galleries. The balance sheet of Wildhorse is given in an abbreviated form
Kevin Moss, owner of Moss Interiors, is negotiating for the purchase of Wildhorse Galleries. The balance sheet of Wildhorse is given in an abbreviated form below.
Wildhorse Gallaries Balance Sheet As of December 31, 2020 | ||||||||
---|---|---|---|---|---|---|---|---|
Assets | Liabilities and Stockholders Equity | |||||||
Cash | $121,000 | Accounts payable | $49,800 | |||||
Land | 71,600 | Notes payable (long-term) | 307,100 | |||||
Buildings (net) | 201,600 | Total liabilities | 356,900 | |||||
Equipment (net) | 176,600 | Common stock | $216,000 | |||||
Copyrights (net) | 31,600 | Retained earnings | 29,500 | 245,500 | ||||
Total assets | $602,400 | Total liabilities and stockholders equity | $602,400 |
Moss and Wildhorse agree that:
1. | Land is undervalued by $30,000. | |
2. | Equipment is overvalued by $5,000. |
Wildhorse agrees to sell the gallery to Moss for $350,000. Prepare the entry to record the purchase of Wildhorse Galleries on Mosss books.
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