I have this question and not sure how to answer it. Jones Manufacturing Company decided to expand further by purchasing Smith Company.

I have this question and not sure how to answer it.

Jones Manufacturing Company decided to expand further by purchasing Smith Company. The balance sheet of Smith Company as of December 31, 2016 was as follows

                 Smith Company

                   Balance Sheet

                 December 31, 2016

Assets                          Liabilities and Equities

Cash          $  210,000   Accounts payable   $  425,000

Receivables       350,000   Mortgage Payable     125,500

Allowance          (1,500)

Supplies            6,500   Common stock       800,000

Inventory          375,000   Retained earnings     594,000

Plant assets      1,125,000

Accumulated Depr. (120,500)

Total assets      $1,944,500   Total liab. & equities  $1,944,500

An appraisal, agreed to by the parties, indicated that the fair market value of the inventory was $340,000 and that the fair market value of the plant assets was $1,150,000. A patent that Smith Company possessed was determined to have a value of $3,000. The fair market value of the receivables is equal to the amount reported on the balance sheet. The agreed purchase price was $1,850,000, and this amount was paid in cash to the previous owners of Smith Company.

Instructions

Journalize the purchase of Smith Company by Jones Manufacturing showing the amount of goodwill.