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12 April, 21:26

In Motion Upper T minus Shirts paid $ 180 comma 000 for a group purchase of land, building, and equipment. At the time of the acquisition, the land had a market value of $ 95 comma 000 , the building $ 57 comma 000 , and the equipment $ 38 comma 000. Journalize the lump-sum purchase of the three assets for a total cost of $ 180 comma 000 , the amount for which the business signed a note payable.

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  1. 13 April, 00:56
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    The Journal Entry with their narrations is shown below:-

    Explanation:

    The Journal Entry is shown below:-

    Land Dr, $90,000

    Building Dr, $54,000

    Equipment Dr, $36,000

    To Notes payable $180,000

    (Being Notes payable is recorded)

    Working Note

    Purchase price allocated to land = Paid cost * (Land value : (Land value + Building value + Equipment value)

    = $180,000 * ($95,000 : ($95,000 + $57,000 + $38,000)

    = $180,000 * ($95,000 : $190,000)

    = $90,000

    Purchase price allocated to building = Paid cost * (Building value : (Land value + Building value + Equipment value)

    = $180,000 * ($57,000 : ($95,000 + $57,000 + $38,000)

    = $180,000 * ($57,000 : $190,000)

    = $54,000

    Purchase price allocated to equipment = Paid cost * (Equipment value : (Land value + Building value + Equipment value)

    = $180,000 * ($38,000 : ($95,000 + $57,000 + $38,000)

    = $180,000 * ($38,000 : $190,000)

    = $36,000
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