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Prepare the entry to record the purchase of terrell

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Fred Graf, owner of Graf Interiors, is negotiating for the purchase of Terrell Galleries. The balance sheet of Terrell is given in an abbreviated form below.

TERRELL GALLERIES
BALANCE SHEET
AS OF DECEMBER 31, 2012
Assets


Liabilities and Stockholders' Equity



Cash
$100,000
Accounts payable


$50,000
Land
70,000
Notes payable (long term)


300,000
Buildings (net)
200,000
   Total liabilities


350,000
Equipment (net)
175,000
Common stock
$200,000

Copyrights (net)
30,000
Retained earnings
25,000
225,000
Total assets
$575,000
Total liabilities and stockholders' equity


$575,000

 

Graf and Terrell agree that:

1.
Land is undervalued by $50,000.
2.
Equipment is overvalued by $5,000.

Terrell agrees to sell the gallery to Graf for $380,000.
Prepare the entry to record the purchase of Terrell Galleries on Graf's books.

Reference no: EM13484585

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