Advanced Financial Accounting 12th Edition by Theodore Christensen solution manual
Buildings
170,000
Equipment
90,000
Accounts Payable
45,000
Accumulated Depreciation – Buildings
40,000
Accumulated Depreciation – Equipment
10,000
Common Stock
180,000
Additional Paid-In Capital
140,000
P1-25 Creation of New Subsidiary
a. Journal entry recorded by Pagle Corporation for transfer of assets
and accounts payable to Sand Corporation:
Investment in Sand Corporation Common Stock
400,000
Allowance for Uncollectible Accounts Receivable
5,000
Accumulated Depreciation
40,000
Accounts Payable
10,000
Cash
30,000
Accounts Receivable
45,000
Inventory
60,000
Land
20,000
Buildings and Equipment
300,000
b. Journal entry recorded by Sand Corporation for receipt of assets and
accounts payable from Pagle Corporation:
Cash
30,000
Accounts Receivable
45,000
Inventory
60,000
Land
20,000
Buildings and Equipment
300,000
Allowance for Uncollectible Accounts Receivable
5,000
Accumulated Depreciation
40,000
Accounts Payable
10,000
Common Stock
50,000
Additional Paid-In Capital
350,000
P1-26 Incomplete Data on Creation of Subsidiary
a. The book value of assets transferred was $152,000 ($3,000 + $16,000 + $27,000 + $9,000 + $70,000 + $60,000 - $21,000 - $12,000).
b. Plumb Company would report its investment in Stew Company equal to the book value of net assets transferred of $138,000 ($152,000 - $14,000).
c. 8,000 shares ($40,000/$5).
d. Total assets declined by $14,000 (book value of assets transferred of $152,000 - investment in Stew Company of $138,000).
e. No effect. The shares outstanding reported by Plumb Company are not affected by the creation of Stew Company.
P1-27 Acquisition in Multiple Steps
Peal Corporation will record the following entries:
(1)
Investment in Seed Company Stock
85,000
Common Stock - $10 Par Value
40,000
Additional Paid-In Capital
45,000
(2)
Merger Expense
3,500
Additional Paid-In Capital
2,000
Cash
5,500
P1-28 Journal Entries to Record a Business Combination
Journal entries to record acquisition of SKK net assets:
(1)
Merger Expense
14,000
Cash
14,000
Record payment of legal fees.
(2)
Deferred Stock Issue Costs
28,000
Cash
28,000
Record costs of issuing stock.
(3)
Cash and Receivables
28,000
Inventory
122,000
Buildings and Equipment
470,000