purchase of a company hull company purchased heaston company for 750 000 cash a sche 692294
Purchase of a Company
Hull Company purchased Heaston Company for $750,000 cash. A schedule of the market values of Heaston’s assets and liabilities as of the purchase date follows.
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Heaston Company |
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Schedule of Asset and Liability Market Values |
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Assets |
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Cash |
$ 5,000 |
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Receivables |
78,000 |
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Inventory |
136,000 |
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Land, buildings, and equipment |
436,000 |
$655,000 |
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Liabilities |
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Current liabilities |
$ 80,000 |
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Long term debt |
120,000 |
200,000 |
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Net asset market value |
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$455,000 |
1. Make the journal entry necessary for Hull Company to record the purchase.
2. Assume that the purchase price is $385,000 cash. Make the journal entry necessary to record the purchase.