Question
Question Four (14 marks) You are considering the purchase of Addison Company.The following information is available at December 31, 2017: Assets Cash118,000 Land70,000 Equipment185,000 Building
Question Four (14 marks)
You are considering the purchase of Addison Company.The following information is available at December 31, 2017:
Assets
Cash118,000
Land70,000
Equipment185,000
Building (net)244,000
Copyright (net)98,000
Total assets715,000
Liabilities and Shareholders' Equity
Account payable92,000
Long-term notes payable351,000
Total liabilities443,000
Common shares200,000
Retained Earnings72,000272,000
Total liabilities and
Shareholders' equity715,000
Land is undervalued by $40,000 and equipment is overvalued by $12,000.Addison agrees to sell the company for $382,000.
Required:
Prepare the journal entry to record the purchase of the company's net assets on your company's books.Show all calculations.
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Fundamental Accounting Principles Volume II
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
16th Canadian edition
1259261433, 978-1260305838
