Plant acquisitions for selected companies are as follows. 1. Blue Spruce Corporation purchased a company car by making a $5,490 cash down payment and signing a 1-year, $24,400, 10% note payable. The purchase was recorded as follows. Automobiles 32,330 Cash 5,490 Notes Payable 24,400 Interest Payable 2,440 2. As an inducement to locate its new branch office in the city of Greenwood Acres, Crane Co. received land and a building from the city at no cost. The appraised value of the land was $61,000. The appraised value of the building was $213,500. Since it paid nothing for the land and building, Crane Co. made no journal entry to record the transaction. 3. Waterway Corporation purchased warehouse shelving for $122,000, terms 1/10, n/30. At the purchase date, Waterway intended to take the discount. Therefore, it made no entry until it paid for the acquisition. The entry was: Warehouse fixtures 122,000 Cash 120,780 Purchase Discounts 1,220
Plant acquisitions for selected companies are as follows.
1. Blue Spruce Corporation purchased a company car by making a $5,490 cash down payment and signing a 1-year, $24,400, 10% note payable. The purchase was recorded as follows.
| Automobiles | 32,330 | |||
| Cash | 5,490 | |||
| Notes Payable | 24,400 | |||
| Interest Payable | 2,440 |
2. As an inducement to locate its new branch office in the city of Greenwood Acres, Crane Co. received land and a building from the city at no cost. The appraised value of the land was $61,000. The appraised value of the building was $213,500. Since it paid nothing for the land and building, Crane Co. made no
3. Waterway Corporation purchased warehouse shelving for $122,000, terms 1/10, n/30. At the purchase date, Waterway intended to take the discount. Therefore, it made no entry until it paid for the acquisition. The entry was:
| Warehouse fixtures | 122,000 | |||
| Cash | 120,780 | |||
| Purchase Discounts | 1,220 |
4. Sheridan Company built a piece of equipment for its factory. The cost of constructing the equipment was $195,200. Sheridan could have purchased the equipment for $231,800. The controller made the following entry.
| Equipment | 231,800 | |||
| Cash, Materials, etc. | 195,200 | |||
| Profir on Construction | 36,600 |
5. Larkspur Inc. acquired land, buildings, and equipment from Sale Corp., for a lump-sum price of $1,220,000. The book values of the assets on Sale’s books at the date of purchase, as well as fair values for the assets, based on an appraisal performed shortly before the purchase, were as follows.
| Asset |
Book Value
|
Fair Value
|
||||
|---|---|---|---|---|---|---|
| Land | $305,000 | $427,000 | ||||
| Buildings | 549,000 | 793,000 | ||||
| Equipment | 610,000 | 366,000 | ||||
| Total | $1,464,000 | $1,586,000 |
The company decided to take the lower of the two values for each asset acquired. The following entry was made.
| Land | 305,000 | |||
| Buildings | 549,000 | |||
| Equipment | 366,000 | |||
| Cash | 1,220,000 |
Prepare the entry that should have been made at the date of each acquisition. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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