Palmer, owner of Palmer Interiors, is negotiating for the purchase of Ruth Inc. The balance sheet of Ruth Inc. is given in an abbreviated form, as follows:   PALMER INTERIORSBALANCE SHEETAS OF DECEMBER 31, 2020 Assets Liabilities and Stockholders’ Equity  Cash$ 240,000Accounts payable $ 120,000Land168,000Long-term notes payable      720,000Buildings (net)470,000Total liabilities 840,000Equipment (net)420,000Common stock$480,000 Copyrights (net)       82,000Retained earnings   60,000     540,000Total assets$1,380,000Total liabilities and stockholders’ equity $1,380,000 Palmer and Ruth agree that:Land is undervalued by $72,000.Equipment is overvalued by $12,000.Ruth agrees to sell the business to Palmer for $740,000.Prepare the entry to record the purchase of Ruth Inc. on Palmer’s books.

Question
Asked Nov 19, 2019
1 views

Palmer, owner of Palmer Interiors, is negotiating for the purchase of Ruth Inc. The balance sheet of Ruth Inc. is given in an abbreviated form, as follows:

 

 

 

PALMER INTERIORS

BALANCE SHEET

AS OF DECEMBER 31, 2020

 

Assets

 

Liabilities and Stockholders’ Equity

 

 

Cash

$ 240,000

Accounts payable

 

$ 120,000

Land

168,000

Long-term notes payable

 

     720,000

Buildings (net)

470,000

Total liabilities

 

840,000

Equipment (net)

420,000

Common stock

$480,000

 

Copyrights (net)

       82,000

Retained earnings

   60,000

     540,000

Total assets

$1,380,000

Total liabilities and stockholders’ equity

 

$1,380,000

 

Palmer and Ruth agree that:

  1. Land is undervalued by $72,000.
  2. Equipment is overvalued by $12,000.

Ruth agrees to sell the business to Palmer for $740,000.

Prepare the entry to record the purchase of Ruth Inc. on Palmer’s books.

check_circle

Expert Answer

Step 1

Determine correct value of ...

Correct value of Land= 168,000 72,000 240,0000
Correct value of equipment 420,000 -12,000 408,000
help_outline

Image Transcriptionclose

Correct value of Land= 168,000 72,000 240,0000 Correct value of equipment 420,000 -12,000 408,000

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: Harlequin Co. has used the LIFO retail method since it began operations in early 2015 (its base year...

A: Formula for computing cost-to-retail ratio or percentage.

question_answer

Q: Parrish 2-9 #3 Pg 39Please solve and find the missing amount in the T-AccountSelling Expense1) 1/1 B...

A: A T shaped account is an instrument that is utilized to comprehend various leger accounts and repres...

question_answer

Q: FIND RE 1/1 Please calculate the missing information in the following problem and provide the equati...

A: Click to see the answer

question_answer

Q: *Question included in picture.

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any spec...

question_answer

Q: Phoenix Co. acquired a large piece of specialized machinery used in its manufacturing process. The f...

A: "Speeding ticket during transportation and cost incurred to repair a damaged door during installatio...

question_answer

Q: On 1 July 2017, Guinness Ltd acquired two assets within the same class of plant andequipment for cas...

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. Th...

question_answer

Q: PART 2Wilkin Products Ltd. makes a single product using two processes. Quality control check takes p...

A: The ending WIP units, abnormal and normal loss of units have been computed as below

question_answer

Q: how do i journal entry this transaction - common stock has a par $1 Purchased land and a building fr...

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. Th...

question_answer

Q: ions --/1 Question 12 ences View Policies orations Current Attempt in Progress PLUS Support Morales ...

A: Markup percentage of a product using the total cost method is calculated by dividing the ROI by the ...