Fred Graf, owner of Graf Interiors, is negotiating for the purchase of Terrell Galleries. The following statement of financial position of Terrell is given in an abbreviated form.

Graf and Terrell agree that:
1. Land is undervalued by $50,000.
2. Equipment is overvalued by $5,000.
Terrell agrees to sell the gallery to Graf for $380,000.
Instructions
Prepare the entry to record the purchase of Terrell Galleries on Graf's books.

Transcribed Image Text:

Terrell Galleries Statement of Financial Position as of December 31, 2019 Assets Equity and Liabilities Buildings (net) $200,000 Share capital-ordinary $200,000 25,000 $225,000 Equipment (net) 175,000 Retained earnings Copyrights (net) 30,000 Accounts payable 50,000 Land 70,000 Long-term notes payable 300,000 Cash 100,000 Total liabilities 350,000 $575,000 Total equity and liabilities $575,000 Total assets