E12-12B (Accounting for Goodwill) 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. RUTH INC. BALANCE SHEET AS OF DECEMBER 31, 2014 Assets Liabilities and Stockholders Equity Cash $ 240,000 Accounts payable $ 120,000 Land 168,000 Long-term notes payable 720,000 Building (net) 480,000 Total liabilities 840,000 Equipment (net) 420,000 Common stock $480,000 Copyright (net) 72,000 Retained earnings 60,000 540,000 Total assets $1,380,000 Total liabilities and $1,380,000 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 Palmers books.
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