Question - Sandstone Co. purchased Derby Co. for $2,500,000. The following schedule shows the market value of Derby's assets and liabilities on the purchase date:
Assets
Cash $400,000
Receivables $300,000
Inventory $500,000
Land Buildings Equipment $1,100,000
Total Assets $2,300,000
Liabilities
Current $150,000
Long-term $225,000
Total Liabilities $375,000
Net assets market value $1,925,000
Required:
A. Make the journal entry to record the purchase.
B. Make the journal entry if the purchase was for $1,725,000.
C. Make the journal entry if the purchase was for $725,000.