Question

In: Accounting

On January 2, 2016, Revolution Co. issued 150,000 new shares of its $1 par value common...

On January 2, 2016, Revolution Co. issued 150,000 new shares of its $1 par value common stock valued at $16 a share for all of Founders, Inc.’s outstanding common shares. The fair value and book value of Founders’ identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2016, is as follows:

Revolution Founders
Cash $ 250,000 $ 180,000
Inventories $         320,000.00 $         600,000.00
Other Current Assets $         600,000.00 $         400,000.00
Land $         350,000.00 $         500,000.00
Property, Plant & Equipment $     5,100,000.00 $      2,000,000.00
Total Assets $6,620,000   $3,680,000
Accounts Payable $ 800,000 $         350,000.00
Notes Payable $     1,800,000.00 $      1,150,000.00
Common Stock, $1 par $     2,000,000.00 $      1,000,000.00
Additional Paid-in Capital $     1,000,000.00 $         350,000.00
Retained Earnings $     1,020,000.00 $         830,000.00
Total Liabilities & Equities $     6,620,000.00 $      3,680,000.00

Required: Prepare a consolidated balance sheet for Revolution Co. immediately after the business combination.

Solutions

Expert Solution

Beforer acquisition Adjustments Consolidated amount
Revolution Founders Debit Credit Consolidated amount
Cash    2,50,000    1,80,000                   -                        -                          4,30,000
Inventories    3,20,000    6,00,000                   -                        -                          9,20,000
Other Current Assets    6,00,000    4,00,000                   -                        -                        10,00,000
Land    3,50,000    5,00,000                   -                        -                          8,50,000
Property, Plant & Equipment 51,00,000 20,00,000                   -                        -                        71,00,000
Goodwill                -                  -         2,20,000                      -                          2,20,000
   Total Assets 66,20,000 36,80,000                   -                        -                     1,05,20,000
Accounts Payable    8,00,000    3,50,000                   -                        -                        11,50,000
Notes Payable 18,00,000 11,50,000                   -                        -                        29,50,000
Common Stock, $1 par 20,00,000 10,00,000     10,00,000          1,50,000                      21,50,000
Additional Paid-in Capital 10,00,000    3,50,000       3,50,000        22,50,000                      32,50,000
Retained Earnings 10,20,000    8,30,000       8,30,000                      -                        10,20,000
Total Liabilities & Equities 66,20,000 36,80,000                   -                        -                     1,05,20,000

Journal:

Account Debit Credit
Investment in founders        24,00,000
Common Stock, $1 par          1,50,000
Additional Paid-in Capital        22,50,000
Investment in founders        24,00,000
Common Stock, $1 par        10,00,000
Additional Paid-in Capital          3,50,000
Retained Earnings          8,30,000
Goodwill          2,20,000

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

On January 2, 2016, Revolution Co. issued 150,000 new shares of its $1 par value common...
On January 2, 2016, Revolution Co. issued 150,000 new shares of its $1 par value common stock valued at $16 a share for all of Founders, Inc.’s outstanding common shares. The fair value and book value of Founders’ identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2016, is as follows: Revolution Founders Cash $ 250,000 $ 180,000 Inventories 320,000 600,000 Other Current Assets 600,000 400,000 Land 350,000...
PROBLEM 2 On January 1, 2016, Biden Corp. issued shares of its common stock to acquire...
PROBLEM 2 On January 1, 2016, Biden Corp. issued shares of its common stock to acquire all of the outstanding common stock of Raffie Inc. Raffie’s book value was only $140,000 at the time, but Biden issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Biden was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Raffie's records by $60,000 while equipment (five-year life)...
1. A company issued 5,000 shares of its $2 par value common stock for $25 per...
1. A company issued 5,000 shares of its $2 par value common stock for $25 per share on 9-1-17. The entry to record this transaction is a) Debit to ,,,,,,,,,,,,,,,,, for $,,,,,,,,,,,,,,, b) Credit to ,,,,,,,,,,,,,,,,, for $ ,,,,,,,,,,,,, c) Credit to ,,,,,,,,,,,,,,,,,, for $,,,,,,,,, 2. A company has total paid in capital from common stock of $1,500,000 and total paid in capital from preferred stock of $350,000. It has retained earnings of $275,000 and there is treasury stock of...
   On January 1, 2016, A Corp. issued shares of its common stock to acquire all of...
   On January 1, 2016, A Corp. issued shares of its common stock to acquire all of the outstanding common stock of B Inc. B’s book value was only $140,000 at the time, but A issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. A was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on B's records by $60,000 while equipment (five-year life) was undervalued...
On July 1, 2014, Piper Corporation issued 23,000 shares of its own $2 par value common...
On July 1, 2014, Piper Corporation issued 23,000 shares of its own $2 par value common stock for 40,000 shares of the outstanding stock of Sector Inc. in an acquisition. Piper common stock at July 1, 2014 was selling at $16 per share. Just before the business combination, balance sheet information of the two corporations was as follows: Piper               Sector               Sector                                                     Book Book                 Fair                                                    Value Value               Value Cash                                          $25,000              $17,000             $17,000 Inventories 55,000 42,000               47,000 Other current assets                   110,000               40,000               30,000 Land 100,000               45,000               35,000 Plant and equipment-net            660,000              220,000             280,000 $950,000            $364,000            $409,000 Liabilities $220,000              $70,000             $75,000 Capital stock,...
On January 1 Weiss Corporation had 75,000 shares of $0.5 par value common stock issued and...
On January 1 Weiss Corporation had 75,000 shares of $0.5 par value common stock issued and outstanding. During the year, the following transactions occurred. Apr. 1 Issued 8,000 additional shares of common stock for $11 per share. June 15 Declared a cash dividend of $1.50 per share to stockholders of record on June 30. July 10 Paid the $1.50 cash dividend. Dec. 1 Issued 4,000 additional shares of common stock for $12 per share. Dec. 15 Declared a cash dividend...
On January 1, each company issued 26,000 shares of $0.10 par value common stock for $160,000....
On January 1, each company issued 26,000 shares of $0.10 par value common stock for $160,000. Both companies commenced operations on this date. On January 2, each company borrowed $400,000 by issuing a 20-year, 7% note that specified interest plus $20,000 principal is due September 30 each year, beginning on September 30, 2014. On January 3, each company purchased land and a building for $420,000 cash. Both managers allocated $70,000 to the land and $350,000 to the building. On January...
On January 1, 2018, Waterway Industries had 394000 shares of its $2 par value common stock...
On January 1, 2018, Waterway Industries had 394000 shares of its $2 par value common stock outstanding. On March 1, Waterway sold an additional 759000 shares on the open market at $20 per share. Waterway issued a 20% stock dividend on May 1. On August 1, Waterway purchased 415000 shares and immediately retired the stock. On November 1, 610000 shares were sold for $25 per share. What is the weighted-average number of shares outstanding for 2018? (Rounded to the nearest...
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...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT