Purchase of a Company
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Purchase of a Company
Landers Inc. is considering purchasing J&B Properties, which has the following assets and liabilities.
| Cost | Fair Market Value |
Accounts receivable | $ 210,000 | $ 200,000 |
Inventory | 250,000 | 260,000 |
Prepaid insurance | 12,000 | 12,000 |
Buildings and equipment (net) | 88,000 | 168,000 |
Accounts payable | (130,000) | (130,000) |
Net assets | $ 430,000 | $ 510,000 |
1. Make the journal entry necessary for Landers Inc. to record the purchase if the purchase price is $650,000 cash.
2. Assume that the purchase price is $320,000 cash. Make the journal entry necessary to record the purchase.
10 years ago
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purchase_of_a_company.xlsx
