Question

Required information [The following information applies to the questions displayed below.] Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $2,755,000. Harding paid $840,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $888,000; Building, $2,640,000 and Equipment, $1,752,000. (Round percentages to two decimal places: ie .054 = 5%).

What journal entry would be used to record the purchase of the above assets?

Multiple Choice

Land 888,000

Building 2,640,000

Equipment 1,752,000

Cash 5,280,000

Land 888,000

Building 2,640,000

Equipment 1,752,000

Cash 840,000

Notes payable 4,440,000

Land 888,000

Building 2,640,000

Equipment 1,752,000

Cash 1,915,000

Notes payable 840,000

Gain on purchase of long-term assets 2,525,000

Land 468,350

Building 1,377,500

Equipment 909,150

Cash 840,000

Notes payable 1,915,000

Answer 1

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Asset		Appraised Value	Ratio of Appraised	Cost	Ratio*Cost
Land		$            888,000	0.17	$2,755,000	$   468,350
Building		$        2,640,000	0.50	$2,755,000	$1,377,500
Equipment		$        1,752,000	0.33	$2,755,000	$   909,150
Total		$        5,280,000			$2,755,000
Correct Answer	Last One
Account	Debit	Credit
Land	$   468,350
Building	$1,377,500
Equipment	$   909,150
Cash		$            840,000
Note Payable		$        1,915,000