Question

Pittsfield Sound Center pays $300,000 for a group purchase of land, building, and equipment. At the time of acquisition, the land has a current market value of $198,000, the building's current market value is $99,000, and the equipment's current market value is $33,000. Prepare a schedule allocating the purchase price of $300,000 to each of the individual assets purchased based on their relative market values, then journalize the lump-sum purchase of the three assets. The business signs a note payable for the purchase price. Lana 100, - 0 % TOUUUU Building $ 99,000 30 % $ 90,000 '10 $ 30,000 Total $ 330,000 100 $ 300,000 Equipment $ 33.000 Now journalize the lump-sum purchase of the three assets. The business signs a note payable for the purchase price. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Accounts Date Debit JUULL NI da and then click Cher Answer

Answer 1

Solution:

Journal entry:

No.of event	Date	Account title and Explanation	Debit	Credit
1.)		Land($300,000 ×60%)	$180,000
		Building ($300,000 × 30%)	$90,000
		Equipment ($300,000 × 10%)	$30,000
		Net payable		$300,000

( To record the lump - sum purchase of the three assets for a total cost of $300,000)

Current market value

Land	$198,000
Building	$99,000
Equipment	$33,000
Total	$330,000

Percent of total

Land	$198,000 ×$330,000 =60%
Building	$99,000 × $330,000 =30%
Equipment	$33,000 × $330,000 =10%
Total	100%