Prepare the july entry to record purchase

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Question - On July 1, 2020, Hedwig Emporiums purchased Nargle Enterprises by paying $300,000 cash and issuing $200,000 note payable to Luna Lovely. At July 1, 2020, the balance sheet of Nargle Enterprises was as follows:

A/R $50,000

Inventory $110,000

Land $45,000

Buildings (net) $80,000

Equipment (net) $65,000

Trademarks $5,000

Accounts Payable $200,000

Equity $155,000

The recorded amounts all approximate current values except for land (undervalued $10,000), inventory (overvalued $10,000) and trademarks (fair value $30,000). Assume the note was issued at par value.

Required -

1. Prepare the July 1 entry to record purchase of Nargle Enterprises.

2. Prepare the December 31 entry to record amortization of Trademarks assuming a 5 year usual life.

Reference no: EM133087939

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