TERRELL GALLERIES BALANCE SHEET AS OF DECEMBER 31, 2010
Assets
Cash $100,000
Land 70,000
Building (net) 200,000
Equipment (net) 175,000
Copyright (net) 30,000
Total Assets= 575,000
Liabilities and Stockholders' Equity
Accounts payable 50,000
Long-term notes payable 300,000
Total Liabilities 350,000
Common Stock 200,000
Retained Earnings 25,000 225,000
Total Liabilities and Stockholders' equity 575,000
Graf and Terrell agree that:
1. Land is undervalued by $50,000.
2. Equipment is overvalued by $5,000.
Terrell agrees to sell the gallery to Graf for $380,000.
Instructions
Prepare the entry to record the purchase of Terrell Galleries on Graf's books