Palmer, owner of Palmer Interiors, is negotiating for the purchase of Ruth Inc. The balance sheet of Ruth Inc. is given in an abbreviated form, as follows.

Palmer and Ruth agree that:
1. Land is undervalued by $72,000.
2. Equipment is overvalued by $12,000.
Ruth agrees to sell the business to Palmer for $840,000.

Instructions
Prepare the entry to record the purchase of Ruth Inc. on Palmer€™sbooks.

Transcribed Image Text:

RUTH INC. BALANCE SHEET As oF DECEMBER 31, 2014 Assets Liabilities and Stockholders' Equity Cash Land Building (net) Equipment (net) 420 Copyright (net 72,000 Retained earnings $120,000 720,000 840,000 s 240,000 Accounts payable 168,000 Long-term notes payable 480,000 Total liabilities ,000 Common stock $480,000 60,000 540,000 $1,380,000 Total assets $1,380,000 Total liabilities and stockholders' equity