Question

In: Accounting

On December 31, 2019, Manama Corporation issued 90,000 shares of its no-par, no-stated-value common stock (current...

On December 31, 2019, Manama Corporation issued 90,000 shares of its no-par, no-stated-value common stock (current fair value $14 a share) for 36,000 shares of the outstanding $10 par common stock of Bahrain Company. The $100,000 out-of-pocket costs of the business combination paid by Manama on December 31, 2019, were allocable as follows: 45% to finders, legal, and accounting fees directly related to the business combination: 55% to the SEC registration statement for Manama’s common stock issued in the businesses combination. There was no contingent consideration.

Immediately prior to the business combination, separate balance sheets of the constituent companies were as follows:

MANAMA CORPORATION AND BAHRAIN COMPANY

Separate Balance Sheets (prior to business combination)

December 31, 2019

                                                                                Manama                           Bahrain                                            Assets

Cash                                                                            $ 200,000                    $ 100,000

Trade accounts receivable (net)                                  400,000                          200,000

Buildings (net)                                                            600,000                          300,000

Land (net)                                                                   1,300,000                    1,000,000

                                                                                               

     Total assets                                                         $ 2,500,000                   $ 1,600,000

                                                                                               

                          Liabilities and Stockholders’ Equity

Current liabilities                                                      $ 800,000                      $ 400,000

Long-term debt                                                                                                  100,000

Common stock, no par or stated value                    1,200,000

Common stock, $10 par                                                                                     400,000

Retained earnings                                                        500,000                          700,000

                                                                                               

      Total liabilities and stockholder’s equity    $ 2,500,000                     $ 1,600,000

            


Current fair values of Bahrain’s identifiable net assets differed from their carrying amounts as follows:

Buildings

$ 250,000

Land

$ 1,300,000

Instructions:

  1. Prepare journal entries for Manama Corporation on December 31, 2017, to record the business combination with Bahrain Company. (6 marks).
  2. Prepare a working paper for consolidated balance sheet for Manama Corporation and subsidiary on December 31, 2017. (8 marks).
  3. Prepare working paper elimination, in journal entry format(omit explanation) for the consolidation balance sheet of Manama and subsidiary on December 31, 2019. (Disregard income taxes.) (3 marks).

Solutions

Expert Solution

note: if you have any doubts feel free to comment me, i will help you. dont give direct thumbs down. if you are satisfied with the answer hit the like button.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

If a corporation issues 5,000 shares of​ $5 par value common stock for $ 90,000​, the...
If a corporation issues 5,000 shares of​ $5 par value common stock for $ 90,000​, the journal entry would include a credit​ to: A.Common Stock for $ 90,000. B.Common Stock for $ 65,000. C.Paidminusin Capital in Excess of Parlong dashCommon for $ 90,000. D.Paidminusin Capital in Excess of Parlong dashCommon for $ 65,000. If a corporation issues 2,000 shares of​ $1 par value common stock for $ 10,000​, the journal entry would include a credit​ to: A.Common Stock for $...
On January 1, 2019, Jonathan Corporation had 75,000 shares of $1 par value common stock issued...
On January 1, 2019, Jonathan Corporation had 75,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred: Mar 1: Issued 30,000 shares, not previously issued of common stock for $575,000 June 1: Declared a cash dividend of $1.00 per share to stockholders of record on June 15 June 30: Paid the $1.00 cash dividend July 1: Declared and issued a 10% stock dividend Dec 1: Purchased 5,000 shares of common stock for...
On January 1, 2019, Jonathan Corporation had 75,000 shares of $1 par value common stock issued...
On January 1, 2019, Jonathan Corporation had 75,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred: Mar 1: Issued 30,000 shares, not previously issued of common stock for $575,000 June 1: Declared a cash dividend of $1.00 per share to stockholders of record on June 15 June 30: Paid the $1.00 cash dividend July 1: Declared and issued a 10% stock dividend Dec 1: Purchased 5,000 shares of common stock for...
On August 31, 20X1, Wood Corp. issued 200,000 shares of its $20 par value common stock...
On August 31, 20X1, Wood Corp. issued 200,000 shares of its $20 par value common stock for the net assets of Pine, Inc. in a business combination accounted for by the acquisition method. The market value of Wood's common stock on August 31 was $45 per share. Wood paid a fee of $200,000 to the consultant who arranged this acquisition. Costs of registering and issuing the equity securities amounted to $150,000. No goodwill was involved in the purchase. What amount...
A corporation issued 6,000 shares of $30 par value common stock for $216,000 cash. A corporation...
A corporation issued 6,000 shares of $30 par value common stock for $216,000 cash. A corporation issued 3,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $30,500. The stock has a $1 per share stated value. A corporation issued 3,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $30,500. The stock has no stated value. A corporation issued 1,500 shares of $50...
Mustang Corporation had 100,000 shares of $2 par value common stock outstanding. On December 31, 2018,...
Mustang Corporation had 100,000 shares of $2 par value common stock outstanding. On December 31, 2018, the company's board of directors declares a 20 percent stock dividend. This stock dividend will be distributed on January 20, 2019 to the stockholders of record on January 15, 2019. The market price of the company's stock is $10 per share on December 31, 2018. Complete the necessary journal entry to record the declaration of the stock dividend by selecting the account names from...
On December 31, 2021, Oriole Company had 1,365,000 shares of $5 par common stock issued and...
On December 31, 2021, Oriole Company had 1,365,000 shares of $5 par common stock issued and outstanding. At December 31, 2021, stockholders’ equity had the amounts listed here. Common Stock $6,825,000 Additional Paid-in Capital 1,845,000 Retained Earnings 1,105,000 Transactions during 2022 and other information related to stockholders’ equity accounts were as follows. 1. On January 10, issued at $114 per share 112,000 shares of $101 par value, 7% cumulative preferred stock. 2. On February 8, reacquired 13,900 shares of its...
On December 31, 2021, Jons Company had 1,300,000 shares of $5 par common stock issued and...
On December 31, 2021, Jons Company had 1,300,000 shares of $5 par common stock issued and outstanding. At December 31, 2021, stockholders' equity had the amounts listed here. Prepare a stockholders' equity section. Common Stock    $6,500,000 Additional Paid-in Capital 1,800,000 Retained Earnings 1,200,000 Transactions during 2022 and other information related to stockholders' equity accounts were as follows. 1. On January 10, issued at $107 per share 120,000 shares of $100 par value, 9% cumulative preferred stock. 2. On February 8,...
On December 31, 2021, Oriole Company had 1,365,000 shares of $5 par common stock issued and...
On December 31, 2021, Oriole Company had 1,365,000 shares of $5 par common stock issued and outstanding. At December 31, 2021, stockholders’ equity had the amounts listed here. Common Stock $6,825,000 Additional Paid-in Capital 1,845,000 Retained Earnings 1,105,000 Transactions during 2022 and other information related to stockholders’ equity accounts were as follows. 1. On January 10, issued at $114 per share 112,000 shares of $101 par value, 7% cumulative preferred stock. 2. On February 8, reacquired 13,900 shares of its...
On December 31, 2021, Oriole Company had 1,365,000 shares of $5 par common stock issued and...
On December 31, 2021, Oriole Company had 1,365,000 shares of $5 par common stock issued and outstanding. At December 31, 2021, stockholders’ equity had the amounts listed here. Common Stock $6,825,000 Additional Paid-in Capital 1,845,000 Retained Earnings 1,105,000 Transactions during 2022 and other information related to stockholders’ equity accounts were as follows. 1. On January 10, issued at $114 per share 112,000 shares of $101 par value, 7% cumulative preferred stock. 2. On February 8, reacquired 13,900 shares of its...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT