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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Fundamental Financial Accounting Concepts
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Mark Edmonds, Christopher Edmonds
10th Edition
126015940X, 978-1260159400
