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.
|TERRELL GALLERIES Balance Sheet as of December 31, 2012|
|Assets||Amount||Liabilities and Stockholders' Equity||Net||Amount|
|Land||70,000||Notes payable (long term)||300,000|
|Buildings (net)||200,000||Total liabilities||350,000|
|Equipment (net)||175,000||Common stock||$200,000|
|Copyrights (net)||30,000||Retained earnings||25,000||225,000|
|Total assets||$575,000||Total liabilities and stockholders' equity||$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.
Prepare the entry to record the purchase of Terrell Galleries on Graf's books.
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.
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