On September 1, 20X1, Apple Corporation purchased Grumpy Company by paying $287,500 cash and issuing a $75,000 note payable to Steve Grumpy. At September 1, 20X1, the balance sheet of Grumpy Company was as follows. All accounts have normal balances. Cash $ 37,500 Accounts Payable $ 150,000 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 & Equity $ 532,800 Accum. Deprec-Building (36,500) Equipment 152,500 Accum. Deprec-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 or use fair value if given.

Instructions

Prepare the ONE (1) September 1 entry for Apple Corporation to record the purchase of Grumpy Company. Use the journal on the next page. Use the proper journal format when recording. i.e., all debits listed first, all credits listed last. You will not run out of room, but you will use all lines provided. There are 13 spaces to fill.