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28 May, 07:06

Arturo pays cash of $4,200,000 to acquire Westmont. No stock is issued and Arturo pays $42,000 for legal fees to complete the transaction. Prepare Arturo's journal entry to record its acquisition of Westmont.

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  1. 28 May, 07:23
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    The journal entries are shown below:

    Inventory A/c Dr $600,000

    Land A/c Dr $990,000

    Building A/c Dr $2,000,000

    Customer relationship A/c Dr $800,000

    To Account payable A/c $80,000

    To Cash A/c $4,200,000

    To Gain on purchase A/c $110,000

    (Being the acquisition is recorded)

    Legal fees expense A/c or Professional service expense A/c Dr $42,000

    To Cash A/c $42,000

    (Being the cash is paid)
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