Recording a Lump-Sum Acquisition

 

Freeman Company purchased a tract of land on which is located a warehouse and a building. The cash purchase price was $392,000 plus $28,000 in fees connected with the purchase. The following information relates to the property.

	Tax Assessment	Seller's Book Value	Original Cost
Land	$56,000	$28,000	$28,000
Warehouse	112,000	56,000	168,000
Building	168,000	140,000	224,000

 

Prepare the journal entry to record this purchase.

 

	Account Name	Dr.	Cr.
	CashPrepaid InsuranceEquipmentBuildingLandWarehouseConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A		Answer
	CashPrepaid InsuranceEquipmentBuildingLandWarehouseConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A		Answer
	CashPrepaid InsuranceEquipmentBuildingLandWarehouseConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A		Answer
	CashPrepaid InsuranceEquipmentBuildingLandWarehouseConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A		Answer
	To record the purchase.