Blossom Company purchased land, a building, and equipment on January 2, 2017, for $910,000. The company...

Blossom Company purchased land, a building, and equipment on January 2, 2017, for $910,000. The company paid $175,000 cash and signed a mortgage note payable for the remainder. Management's best estimate of the value of the land was $385,000; of the building, $425,000; and of the equipment, $130,000. Record the purchase. (Use Mortgage Payable for account.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually . If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2	Land
	Building
	Equipment
	Cash		175,000
	Mortgage Payable

Expert Solution

Solution

Date	Account Titles and Explanation	Debit	Credit
2-Jan	Land	$ 372,713
	Building	$ 411,436
	Equipment	$ 125,851
	Cash		$ 175,000
	Mortgage Payable		$ 735,000
	(lumpsum asset purchased)

Working

	Land	Building	Equipment	Total
Appraisal Value	$ 385,000	$ 425,000	$ 130,000	$ 940,000
Value of cash paid and notes payable accepted				$ 910,000
Allocation of lumpsum amount in ratio of Market value	$ 372,713	$ 411,436	$ 125,851	$ 910,000

ekkarill92 answered 1 year ago

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