In Motion Upper T minus Shirts paid $ 180 comma 000 for a group purchase of land, building, and equipment. At the time of the acquisition, the land had a market value of $ 95 comma 000 , the building $ 57 comma 000 , and the equipment $ 38 comma 000. Journalize the lump-sum purchase of the three assets for a total cost of $ 180 comma 000 , the amount for which the business signed a note payable.

The Journal Entry with their narrations is shown below:-

Explanation:

The Journal Entry is shown below:-

Land Dr, $90,000

Building Dr, $54,000

Equipment Dr, $36,000

To Notes payable $180,000

(Being Notes payable is recorded)

Working Note

Purchase price allocated to land = Paid cost * (Land value : (Land value + Building value + Equipment value)

= $180,000 * ($95,000 : ($95,000 + $57,000 + $38,000)

= $180,000 * ($95,000 : $190,000)

= $90,000

Purchase price allocated to building = Paid cost * (Building value : (Land value + Building value + Equipment value)

= $180,000 * ($57,000 : ($95,000 + $57,000 + $38,000)

= $180,000 * ($57,000 : $190,000)

= $54,000

Purchase price allocated to equipment = Paid cost * (Equipment value : (Land value + Building value + Equipment value)

= $180,000 * ($38,000 : ($95,000 + $57,000 + $38,000)

= $180,000 * ($38,000 : $190,000)

= $36,000