Lexington Garden Supply pays $ 280,000 for a group purchase of land, building, and equipment. At the time of acquisition, the land has a current market value of $ 93,000 , the building's current market value is $ 186,000 , and the equipment's current market value is $ 31,000. Prepare a schedule allocating the purchase price of $ 280,000 to each of the individual assets purchased based on their relative market values, then journalize the lump-sum purchase of the three assets. The business signs a note payable for the purchase price. Begin by preparing a schedule allocating the purchase price of $280,000.
Market (Sales) Value Percentage of Total Market Value Cost of Asset
Land
Building
Equipment
Total
Date Accounts Debit Credit
Account choices:
Accounts Debit Credit
Building
Cash
Equipment
Land
Note Payable
Note Receivable
Now journalize the lump-sum purchase of the three assets. The business signs a note payable for the purchase price.

Given:

Current market value:

Land = $93,000

Building = $186,000

Equipment = $31,000

We are required to prepare a schedule allocating the purchase price of $280,000.

The schedule is prepared below.

___________________________

Market (Sales) Value:

Land= $93,000;

Building= $186,000;

Equipment= $31,000;

Total= 310,000(93,000+186,000+31,000)

____________________________

% of Total Market Value:

Land= 30%(93,000/310,000);

Building= 60%(186,000/310,000); Equipment= 10%(31,000/310,000)

Total = 100%

____________________________

Cost of Asset:

Land= 84,000(30%*280,000)

Building = 168,000(60%*280,000)

Equipment = 28,000(10%*280,000)

Total = 280,000(84,000+168,000+28,000)

____________________________

b) To journalize the lump-sum purchase of the three assets.

Account title:____Debit: _____Credit:

Land _________84,000______0

Building_______168,000_____0

Equipment _____28,000______0

Note payable_____0_______280,000

Answer is attached for easier understanding.

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