Journal Entries Preparation From Data Given In Balance Sheet
Question
Fred Graf, owner of Graf Interiors, is negotiating for the purchase of Terrell Galleries. The balance sheet of Terrell is given in an abbreviated form below.
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TERRELL GALLERIES Balance Sheet as of December 31, 2012 |
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Assets |
Liabilities and Stockholders' Equity |
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Cash Land Buildings (net) Equipment (net) Copyrights (net) Total assets |
$100,000 70,000 200,000 175,000 30,000 $575,000 |
Accounts payable Notes payable (long term) Total liabilities Common stock $200,000 Retained earnings 25,000 Total liabilities and stockholders' equity |
$50,000 300,000 350,000 225,000
$575,000 |
Graf and Terrell agree that:
1. Land is undervalued by $50,000.
2. Equipment is overvalued by $5,000.
Terrell agrees to sell the gallery to Graf for $380,000.
Instructions
Prepare the entry to record the purchase of Terrell Galleries on Graf's books.
Summary
The question belongs to Accounting and it is about preparing journal entries based on the information given in the question which includes a balance sheet and few transactions.
Total Word Count 86