Advanced Financial Accounting 12th Edition by Theodore Christensen solution manual

January 1, 20X2
 

Cash
$    100,000  
Accounts Payable
 
$      60,000

Accounts Receivable
160,000 
Bonds Payable
$450,000 
 

Inventory
360,000 
Less: Discount
    (5,000)
445,000

Land
80,000 
Common Stock
 
280,000

Buildings and Equipment
950,000 
Additional
 

Less: Accumulated
 
  Paid-In Capital
 
560,000

         Depreciation
(250,000)
Retained Earnings
 
180,000

Goodwill
     125,000 
 
 
                   

 
$1,525,000 
 
 
$1,525,000

 
 
Computation of goodwill
 
 
Fair value of consideration given (4,000 x $150)
$600,000 

 
Fair value of net assets acquired ($630,000 - $10,000
    - $145,000)

 (475,000)

 
Goodwill
$125,000 

P1-36  Business Combination
 
Journal entry to record acquisition of Shoot-Toot Tuba net assets:
 
 
Cash
300
 

 
Accounts Receivable
17,000
 

 
Inventory
35,000
 

 
Plant and Equipment
500,000
 

 
Other Assets
25,800
 

 
Goodwill
86,500
 

 
     Allowance for Uncollectibles
 
1,400

 
     Accounts Payable
 
8,200

 
     Notes Payable
 
10,000

 
     Mortgage Payable
 
50,000

 
     Bonds Payable
 
100,000

 
     Capital Stock ($10 par)
 
90,000

 
     Premium on Capital Stock
 
405,000

 
Computation of fair value of net assets acquired
 
 
Cash
$300

 
Accounts Receivable
17,000

 
Allowance for Uncollectible Accounts
(1,400)

 
Inventory
35,000

 
Plant and Equipment
500,000

 
Other Assets
25,800

 
Accounts Payable
(8,200)

 
Notes Payable
(10,000)

 
Mortgage Payable
(50,000)

 
Bonds Payable
 (100,000)

 
Fair value of net assets acquired
$408,500 

 
Computation of goodwill
 
 
Fair value of consideration given (9,000 x $55)
$495,000 

 
Fair value of net assets acquired
 (408,500)

 
Goodwill
$86,500 

P1-37  Combined Balance Sheet
 
a. Balance sheet:
 
Pumpworks and Seaworthy Rope Company
Combined Balance Sheet
January 1, 20X3
 

Cash and Receivables
$110,000 
Current Liabilities
$     100,000

Inventory
142,000 
Capital Stock
214,000

Land
115,000 
Capital in Excess
 

Plant and Equipment
540,000
  of Par Value
216,000

Less: Accumulated
 
Retained Earnings
240,000

          Depreciation
(150,000)
 
 

Goodwill
    13,000 
 
                           

 
$770,000 
 
$    770,000

 
 
Computation of goodwill
 
 
Fair value of consideration given (700 x $300)
$210,000 

 
Fair value of net assets acquired ($217,000 – $20,000)
 (197,000)

 
Goodwill
$13,000 

 
 
b.
(1)  Stockholders' equity with 1,100 shares issued: