Prepare the entry to record purchase of terrell galleries

Assignment Help Accounting Basics

Reference no: EM13825447

Problem-

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
Cash	$100,000	Accounts payable		$50,000
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.

Instructions-

Prepare the entry to record the purchase of Terrell Galleries on Graf's books.

Additional information-

This problem belongs to Accounting and it's about preparing journal entries based on the information given in the problem which includes a balance sheet and few transactions.

Reference no: EM13825447

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