Lexington Garden Supply paid 210000 for a group purchase of

Lexington Garden Supply paid $210,000 for a group purchase of land, building, and equipment. At the time of the acquisition, the land had a market value of $110,000, the building S66,000, and the equipment $44,000. Joumalize the lump-sum purchase of the three assets for a total cost of $210,000, the amount for which the business signed a note payable. (Record a single compound journal entry. Record debits first, then credits. Select the explanation on the last line of the journal antry table.) Date Accounts and Explanation Debit Credit

Solution

Amount to be allocated is calculated as follows: market va % amount to b allocated (a) (b) c=a*b Item land 110,000 50.00% 210,000 105000 Building 66,000 30.00% 210,000 63000 Equipment 44,000 20.00% 210,000 42000 total 220,000 210000 Journal Entry Date Accounting titles and explanations Debit Credit Land 105,000 Building 63,000 Equipment 42,000 Notes payable 210,000