Question

Pitney Co. purchased an office building, land, and furniture for $776,300 cash. The appraised value of...

Pitney Co. purchased an office building, land, and furniture for $776,300 cash. The appraised value of the assets was as follows:
  
  Land $ 139,113
  Building 269,531
  Furniture 460,812
      Total $ 869,456
Required
a. Compute the amount to be recorded on the books for each asset. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)


        

b.

Record the purchase in a horizontal statements model like the following one: (Do not round intermediate calculations. Round your final answers to nearest whole dollar. In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA for not affected. Enter any decreases to account balances with a minus sign.)

       

c.

Prepare the general journal entry to record the purchase. (Do not round intermediate calculations. Round your final answers to nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

record purchase of land, building, and furniture for cash

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Answer #1

Answer

A. The amount to be recorded on the books for each asset:

Particulars Allocated cost
Land ($776,300*139,113/869,456) $124208
Building ($776,300*269,531/869,456) $240653
Furniture ($776,300*460,812/869,456) $411439
Total $776300

B.The purchase in a horizontal statements model like the following one:

b) Horizontal analysis :

PITNEY CO.
Statement model
Assets equity revenue - expenses = net income Cash flows
Cash + land + building + furniture =
($776300) $124208 $240653 $411439 ($776300) IA

C. The general journal entry to record the purchase

Date Particulars Dr Cr
Land $124208
Building $240653
Furniture $411439
Cash $776300
(Being record purchase of assets)
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