Advanced Financial Accounting 12th Edition by Theodore Christensen solution manual

 
 
 
 

 
Value of stock issued ($14 x 180,000)
 
$2,520,000 

 
Fair value of assets acquired
$4,112,500 
 

 
Fair value of liabilities assumed
(1,702,200)
 

 
Fair value of net identifiable assets
 
 (2,410,300)

 
Goodwill
 
$   109,700 

 
 

P1-40  (continued)
 
b. Journal entries on the books of SCC to record the combination:
 
 
Investment in Pintime Industries Stock
2,520,000
 

 
Allowance for Bad Debts
6,500
 

 
Accumulated Depreciation
614,000
 

 
Current Payables
137,200
 

 
Mortgages Payable
500,000
 

 
Equipment Trust Notes
100,000
 

 
Debentures Payable
1,000,000
 

 
     Discount on Debentures Payable
 
40,000

 
     Cash
 
28,000

 
     Accounts Receivable
 
258,000

 
     Inventory
 
381,000

 
     Long-Term Investments
 
150,000

 
     Land
 
55,000

 
     Rolling Stock
 
130,000

 
     Plant and Equipment
 
2,425,000

 
     Patents
 
125,000

 
     Special Licenses
 
95,800

 
     Gain on Sale of Assets and Liabilities
 
1,189,900

 
  Record sale of assets and liabilities.
 
 

 
 
 
 

 
Common Stock
7,500
 

 
Additional Paid-In Capital — Common Stock
4,500
 

 
     Treasury Stock
 
12,000

 
  Record retirement of Treasury Stock:*
 
 

 
  $7,500 = $5 x 1,500 shares
 
 

 
  $4,500 = $12,000 - $7,500
 
 

 
 
 
 

 
Common Stock
592,500
 

 
Additional Paid-In Capital — Common
495,500
 

 
Additional Paid-In Capital — Retirement
of Preferred
22,000
 

 
Retained Earnings
1,410,000
 

 
     Investment in Pintime
Industries Stock
 
2,520,000

 
  Record retirement of SCC stock and
distribution of Integrated Industries stock:
 
 

 
  $592,500 = $600,000 - $7,500
 
 

 
  $495,500 = $500,000 - $4,500
 
 

 
  1,410,000 = $220,100 + $1,189,900
 
 

 
 
 
 

 
  *Alternative approaches exist.