David Moss, owner of Moss Interiors, is negotiating for the purchase of Pharoah Galleries. The balance sheet of Pharoah is given in an abbreviated form below.

Pharoah Gallaries 

Balance Sheet 

As of December 31, 2020

Assets                                                                  Liabilities and Stockholder's Equity

Cash    $105,000                      Accounts payable                                50,700

Land                 $70,000            Notes payables( long- term)           301,700                               

Building Net     $200,000        Total liabilities                                      352,400                        

Equipment Net $175,000        Common Stock    $203,000

Copyright net    30,000           Retained earnings   24,600                 227,600

                                            Total Liabilities and Stockholder's equity $580,000

Moss and Pharoah agree that :

1. Land is undervalued by $30,000

2. Equipment is overvalued by $5,000.

Pharoah agrees to sell the gallery to Moss for 350,000

Instructions:

Prepare the entry to record the purchase of Pharoah Galleries on Moss's books.

Answer rating: 100% (QA)

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