Exercise 12-11 Fred Moss, owner of Moss Interiors, is negotiating for the purcha

Question

Exercise 12-11 Fred Moss, owner of Moss Interiors, is negotiating for the purchase of Carla Vista Galleries. The balance sheet of Carla Vista is given in an abbreviated form below CARLA VISTA GALLERIES BALANCE SHEET AS OF DECEMBER 31, 2017 Assets Liabilities and Stockholders' Equity $119,000 71,400 201,400 176,400 31,400 $599,600 $49,500 305,200 354,700 Cash Land Buildings (net) Equipment (net) Copyrights (net) Total assets Accounts payable Notes payable (long-term) Total liabilities Common stock Retained earnings Total liabilities and stockholders' equity $201,400 43,500 244,900 $599,600 Moss and Carla Vista agree that: 1. Land is undervalued by $40,300 2. Equipment is overvalued by $5,300 Carla Vista agrees to sell the gallery to Moss for $380,200 Prepare the entry to record the purchase of Carla Vista Galleries on Moss's books. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Cash Debit Credit Land Building Equipment Copyrights Goodwill Accounts Payable Long-term Notes Payable Cash

Explanation / Answer

Journal entry to record purchase on moss's books :

Date accounts & explanation debit credit Land 31100 Building 201400 Equipment 181700 Copyright 31400 Goodwill 289300 Account payable 49500 Long term notes payable 305200 Cash 380200 (To record purchase)

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