Foley Distribution ServiceFoley Distribution Service
paid
$ 210 comma 000$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 comma 000$110,000,
the building
$ 88 comma 000$88,000,
and the equipment
$ 22 comma 000$22,000.
Journalize the lump-sum purchase of the three assets for a total cost of
$ 210 comma 000$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 entry table.

Explanation:

The single compound journal entry is as follows:

Land A/c Dr $105,000       ($210,000 × 0.5)

Building A/c Dr $84,000     ($210,000 × 0.4)

Equipment A/c Dr $21,000   ($210,000 × 0.1)

           To Notes payable A/c $210,000

(Being the acquisition is made via note payable is recorded)

The computation is shown below:

Total market value

= Land market value + building market value + equipment market value

= $110,000 + $88,000 + $22,000

= $220,000

The proportion of each asset to market value is

Land market value        $110,000  (A)            0.5  (A ÷ D)

Building market value    $88,000 (B)            0.4  (B ÷ D)

Equipment market value $22,000 (C)           0.1   (C ÷ D)

Total market value           $220,000 (D)

answer: b 56, 250

explanation: