Question

Assets:	Thompson Inc.	Panna Corporation
	Carrying Amount	Carrying Amount	Fair value
Cash	$400,000	$10,000	$10,000
Accounts receivable	80,000	25,000	22,000
Inventory	100,000	70,000	75,000
Plant	500,000	165,000	175,000
Patents	100,000	25,000	25,000
Trade marks	-	-	20,000
Goodwill	120,000	10,000	10,000
Total Assets	1,300,000	305,000
Liabilities and Equity:
Current liabilities	$160,000	55,000	60,000
Long-term liabilities	100,000	65,000	60,000
Common shares (At $10 per share)	1,000,000	100,000
Retained earnings	40,000	85,000
Total liabilities and equity	1,300,000	305,000

Suppose Thompson Inc. purchased all the identifiable assets except cash and goodwill from Panna Corporation and assumed both the current liabilities and long-term liabilities by paying $ 210,000 cash on January 1, 2018.  

• Journal entry/entries required in the book of Thompson Corporation

• Balance sheet of Thompson Inc. on January 1, 2018 after this purchase

Answer 1

1.)	Account Titles	Debit $	Credit $
	Accounts receivable	22,000
	Inventory	75,000
	Plant	175,000
	Patents	25,000
	Trademark	20,000
	Current liabilities		60,000
	Long Term Liabilities		60,000
	Cash		210,000
	Goodwill ( Balancing Figure)	13,000

2.)	Assets:	Amount $
	Cash	190,000	=400000-210000
	Accounts receivable	102,000	=80000+22000
	Inventory	175,000	=100000+75000
	Plant	675,000	=500000+175000
	Patents	125,000	=100000+25000
	Trade marks	20,000
	Goodwill	133,000	=120000+13000
	Total Assets	1,420,000
	Liabilities and Equity:
	Current liabilities	220,000	=160000+60000
	Long-term liabilities	160,000	=100000+60000
	Common shares (At $10 per share)	1,000,000
	Retained earnings	40,000
	Total liabilities and equity	1,420,000