Question

Plant acquisitions for selected companies are as follows. 1. Marin Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $728,000. At the time of purchase, Torres's assets had the following book and appraisal values. Book Values Appraisal Values Land $208,000 $156,000 Buildings 364,000 260,000 312,000 Equipment 312.000 To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made. Land 156,000 Buildings 260,000 Equipment 312,000 Cash 728,000

Answer 1

ANSWER

Prepare journal entry.

Date Credit Acccount title and explanation Land Buildings Equipment Cash (To record the purchase of assets) Debit $136,500 $318,500 $273,000 $728,000 Date Credit Debit $26,000 Acccount title and explanation Equipment Cash Notes payable (To record the purchase of equipment partly for cash and partly on note) $2,080 $23,920 Date Credit Debit | $20,972 Acccount title and explanation Equipment (21,400-(21,400*2%) Accounts payable (To record the purchase of equipment on note terms 2/10, n/30) $20,972 Date Credit Debit $28,080 Acccount title and explanation Land Contribution revenue (To record the land received as donation) $28,080 Date Credit Debit $624,000 Acccount title and explanation Buildings Cash (To record the land received as donation) $624,000

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