29 Jun Note: Parentheses indicate a credit balance.
Question
Q1. On June 30, 2013, Wisconsin, Inc., issued $300,000 in debt and 15,000 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2013, were as follows:
Wisconsin Badger
Revenues $ (900,000 ) $ (300,000)
Expenses 660,000 200,000
Net income $(240,000 ) $ (100,000)
Retained earnings, 1/1 $(800,000 ) $(200,000)
Net income (240,000 ) (100,000)
Dividends paid 90,000 0
Retained earnings, 6/30 $(950,000 )$(300,000)
Cash $ 80,000 $ 110,000
Receivables and inventory 400,000 170,000
Patented technology (net) 900,000 300,000
Equipment (net) 700,000 600,000
Total assets $ 2,080,000 $ 1,180,000
Liabilities $ (500,000 ) $ (410,000)
Common stock (360,000 ) (200,000)
Additional paid-in capital (270,000 ) (270,000)
Retained earnings (950,000 ) (300,000)
Total liabilities and equities $(2,080,000 ) $(1,180,000)
Note: Parentheses indicate a credit balance.
Wisconsin also paid $30,000 to a broker for arranging the transaction. In addition, Wisconsin paid $40,000 in stock issuance costs. Badger’s equipment was actually worth $700,000, but its patented technology was valued at only $280,000.
What are the consolidated balances for the following accounts? (Input all amounts as positive values.)
Accounts Amounts
a. Net income $
b. Retained earnings, 1/1/13 $
c. Patented technology $
d. Goodwill $
e. Liabilities $
f. Common stock $
g. Additional paid-in capital $
Q2.
The following book and fair values were available for Westmont Company as of March 1.
Book Value Fair Value
Inventory $ 630,000 $ 600,000
Land 750,000 990,000
Buildings 1,700,000 2,000,000
Customer relationships 0 800,000
Accounts payable (80,000 ) (80,000 )
Common stock (2,000,000)
Additional paid-in capital(500,000)
Retained earnings 1/1 (360,000 )
Revenues (420,000 )
Expenses 280,000
Note: Parentheses indicate a credit balance.
Arturo Company pays $4,000,000 cash and issues 20,000 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,000 and Arturo pays $42,000 for legal fees to complete the transaction.
Prepare Arturo’s journal entry to record its acquisition of Westmont.
General Journal Debit Credit
To record acquisition of Westmont Company.
To record legal fees related to the combination. DR CR
To record payment of stock issuance costs. DR. CR
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.