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Homework answers / question archive / Allocating costs for a basket purchase LO 8-1 Pitney Co purchased an office building, land, and furniture for $784,600 cash
Allocating costs for a basket purchase LO 8-1 Pitney Co purchased an office building, land, and furniture for $784,600 cash. The appraised value of the assets was as follows: Land Building Furniture Total $158,175 228.476 492, 101 5878 752 Required a. Compute the amount to be recorded on the books for each asset b. Show the purchase in a horizontal statements model like the following one: c. Prepare the general journal entry to record the purchase
| a. | Amount to be recorded in the books for each asset | |||||||||
| Land = $158,175/$878,752 * $784,600 = $141,228 | ||||||||||
| Building = $228,476/$878,752 * $784,600 = $203,996 | ||||||||||
| Furniture = $492,101/$878,752 * $784,600 = $439,376 | ||||||||||
| b. | Horizontal statement model | |||||||||
| Assets = Liabilities + Equity | ||||||||||
| Cash | Land | Building | Furniture | Liabilities | Common Stock + Revenues - Expenses | Cash Flows | ||||
| ($784,600) | $141,228 | $203,996 | $439,376 | ($784,600) |
| c. | Journal entry | ||
| Date | Account Titles & Explanation | Debit | Credit |
| Land | $141,228 | ||
| Building | $203,996 | ||
| Furniture | $439,376 | ||
| Cash | $784,600 | ||
| (Being Assets purchased in cash) | |||
| . | |||
