Problem - On July 1, 2010, Brandon Corporation purchased Mills Company by paying $250,000 cash and issuing a $150,000 note payable to Steve Mills. At July 1, 2010, the balance sheet of Mills Company was as follows:
Cash $50,000 Accounts Payable $200,000
Accounts Receivable 90,000 Stockholder's equity 235,000
Inventory 100,000
Land 40,000
Building (net) 75,000
Equipment (net) 70,000
Trademarks 10,000
$435,000
$435,000
The recorded amounts all approximate current values except for land (fair value of $80,000), inventory (fair value of $125,000), and trademarks (fair value of $15,000).
Prepare the July 1 entry for Brandon Corporation to record the purchase.