Question

In: Accounting

Boston Baked Beans company makes a lump sum purchase of land, factory, and equipment for $3,000,000....

Boston Baked Beans company makes a lump sum purchase of land, factory, and equipment for $3,000,000. The market values for land, building, and equipment are $500,000 $2,500,000 and $1,000,000 respectively. The journal entry to record the purchase would be:

A) Debit to land for $500,000 building for $2,500,000 and equipment for $1,000,000

B) Debit to Equipment for $500,500 and a debit to land for $750,000

C) both D and E

D) Debit to land $375,500 and credit to cash for $ 3,000,000

E) Debit building for $ 1,875,000 and debt to equipment $750,000

Solutions

Expert Solution

Total market value = 500000+2500000+1000000 = 4000000

Journal entry

Date account and explanation debit credit
Land (3000000*5/40) 375000
Building (3000000*25/40) 1875000
Equipment 750000
     Cash 3000000

So answer is e) Debit building for $ 1,875,000 and debt to equipment $750,000

ekkarill92 answered 1 year ago
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