Problem:
Fred Moss, owner of Moss Interiors, is negotiating for the purchase of Zweifel Gallaries. The balance sheet of Zweifel is given in an abbreviated form below.
Zweifel Galleries
Balance Sheet
As of Dec. 31, 2008
ASSETS:
Cash - $100,000
Land - 70,000
Building (net) - 200,000
Equipment (net) - 175,000
Copyright (net) - 30,000
Total assets - $575,000
LIABILITIES:
Accounts Payabe - $50,000
Long-term notes payable - 300,000
total liabilities - 350,000
Common stock - $200,000
Retained Earnings - 25,000 - 225,000
Total liabilities and stockholders' equity - $575,000
Moss and Zweifel agree that:
1. Land is undervalued by $30,000
2. Equipment is overvalued by $5,000
Zweifel agrees to sell the gallery to Moss for $350,000.
Insructions:
Prepare the entry to record the purchase of Zweifel Galleries on Moss's books.