Question

In: Accounting

The following book and fair values were available for Westmont Company as of March 1. Book...

The following book and fair values were available for Westmont Company as of March 1.
Book Value Fair Value
  Inventory $ 300,000 $ 248,250
  Land 816,000 1,085,250
  Buildings 2,050,000 2,375,500
  Customer relationships 0 822,750
  Accounts payable (100,000 ) (100,000 )
  Common stock (2,000,000 )
  Additional paid-in capital (500,000 )
  Retained earnings 1/1 (395,000 )
  Revenues (454,500 )
  Expenses 283,500

Arturo Company pays $3,470,000 cash and issues 24,300 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,800 and Arturo pays $47,400 for legal fees to complete the transaction.

Prepare Arturo’s journal entry to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Solutions

Expert Solution

Account Titles and Explanation Debit Credit
Inventory 248250
Land 1085250
Buildings 2375500
Customer Relationships 822750
Goodwill 253250
       Accounts payable 100000
       Common Stock 48600 =24300*2
       Additional Paid-In Capital 1166400 =24300*(50-2)
       Cash 3470000
Account Titles and Explanation Debit Credit
Professional Services Expense 47400
       Cash 47400
To record legal fees related to the combination.
Account Titles and Explanation Debit Credit
Additional Paid-In Capital 25800
       Cash 25800
To record payment of stock issuance costs.

Related Solutions

The following book and fair values were available for Westmont Company as of March 1. Book...
The following book and fair values were available for Westmont Company as of March 1. Book Value Fair Value Inventory $ 367,500 $ 318,000 Land 756,000 998,250 Buildings 2,040,000 2,346,000 Customer relationships 0 842,250 Accounts payable (88,000 ) (88,000 ) Common stock (2,000,000 ) Additional paid-in capital (500,000 ) Retained earnings, 1/1 (412,000 ) Revenues (446,000 ) Expenses 282,500 Arturo Company pays $3,740,000 cash and issues 21,500 shares of its $2 par value common stock (fair value of $50 per...
The following book and fair values were available for Westmont Company as of March 1. Book...
The following book and fair values were available for Westmont Company as of March 1. Book Value Fair Value Inventory $ 692,500 $ 643,750 Land 757,500 1,047,750 Buildings 1,755,000 2,073,750 Customer relationships 0 804,750 Accounts payable (102,000 ) (102,000 ) Common stock (2,000,000 ) Additional paid-in capital (500,000 ) Retained earnings 1/1 (434,500 ) Revenues (488,500 ) Expenses 320,000 Arturo Company pays $3,580,000 cash and issues 29,800 shares of its $2 par value common stock (fair value of $50 per...
The following book and fair values were available for Westmont Company as of March 1. Book...
The following book and fair values were available for Westmont Company as of March 1. Book Value Fair Value Inventory $ 333,250 $ 281,250 Land 794,250 1,059,000 Buildings 2,025,000 2,385,750 Customer relationships 0 820,500 Accounts payable (94,500 ) (94,500 ) Common stock (2,000,000 ) Additional paid-in capital (500,000 ) Retained earnings 1/1 (396,000 ) Revenues (473,500 ) Expenses 311,500 Arturo Company pays $3,900,000 cash and issues 29,000 shares of its $2 par value common stock (fair value of $50 per...
Presented below are the book values and fair values of the assets and liabilities of A,...
Presented below are the book values and fair values of the assets and liabilities of A, Inc. and B Inc. on Dec 4, 2016, immediately prior to a business combination. The Company is evaluating where A should be the acquirer or if B should be the acquirer. Axtel, Inc Barcel, Inc. Book value Fair value Book value Fair value Current assets $   40,000 $ 100,000 $   50,000 $   25,000 PP&E $ 200,000 $ 400,000 $ 150,000 $ 175,000 Current liabilities...
SafeData Corporation has the following account balances and respective fair values on June 30: Book Values...
SafeData Corporation has the following account balances and respective fair values on June 30: Book Values Fair Values Receivables $ 106,000 $ 106,000 Patented technology 192,000 192,000 Customer relationships 0 484,000 In-process research and development 0 324,000 Liabilities (472,000 ) (472,000 ) Common stock (100,000 ) Additional paid-in capital (300,000 ) Retained earnings deficit, 1/1 676,000 Revenues (410,000 ) Expenses 308,000 Privacy First, Inc., obtained all of the outstanding shares of SafeData on June 30 by issuing 20,000 shares of...
SafeData Corporation has the following account balances and respective fair values on June 30: Book Values...
SafeData Corporation has the following account balances and respective fair values on June 30: Book Values Fair Values Receivables $ 103,500 $ 103,500 Patented technology 109,000 109,000 Customer relationships 0 670,000 In-process research and development 0 338,000 Liabilities (578,000 ) (578,000 ) Common stock (100,000 ) Additional paid-in capital (300,000 ) Retained earnings deficit, 1/1 853,500 Revenues (340,000 ) Expenses 252,000 Privacy First, Inc., obtained all of the outstanding shares of SafeData on June 30 by issuing 20,000 shares of...
SafeData Corporation has the following account balances and respective fair values on June 30: Book Values...
SafeData Corporation has the following account balances and respective fair values on June 30: Book Values Fair Values Receivables $ 108,000 $ 108,000 Patented technology 123,000 123,000 Customer relationships 0 840,000 In-process research and development 0 524,000 Liabilities (596,000 ) (596,000 ) Common stock (100,000 ) Additional paid-in capital (300,000 ) Retained earnings deficit, 1/1 847,400 Revenues (312,000 ) Expenses 229,600 Privacy First, Inc., obtained all of the outstanding shares of SafeData on June 30 by issuing 20,000 shares of...
The following information is available for the Turner Company for the month of March: a.   On...
The following information is available for the Turner Company for the month of March: a.   On March 31, after all transactions have been recorded, the balance in the company's Cash account has a balance of $17,635. b.   The company's bank statement shows a balance on March 31 of $35,052. c.   Outstanding checks at March 31 include check #2748 in the amount of $3,975 and check #2753 in the amount of $5,667. d. Examination of the checks on the bank statement...
1.) AB Company has the following production information available for March: Total materials costs                           
1.) AB Company has the following production information available for March: Total materials costs                                                              $147,000 Equivalent number of complete units of materials                  15,000 Total conversion costs                                                           $ 75,000 Equivalent number of complete units of conversion costs      12,000 The total manufacturing cost per unit (rounded to nearest cent) is closest to: A. $6.25 B. $9.80 C. $16.05 D. $8.22 2.) ABD Company, materials purchases and uses during the first quarter are as follows: Jan. 11, purchased 500...
The following information regarding the operations for March of the Goodfield Products Company are available:
The following information regarding the operations for March of the Goodfield Products Company are available: (all monetary values are in Php)The book show these account balances as of March 1:Raw materials and suppliesP 65,000Work in process*292,621Finished goods78,830The work in process* account is supported by these job order cost sheets:Job. No.ItemDirect MaterialsDirect LaborFactory Overhead20480,000 balloonsP 15,230P 21,430P 13,8002055,000 life rafts40,45055,24022,37020610,000 life belts60,87543,86019,366TotalP116,555P120,530P 55,536During March, these transactions occurred:(a) Purchase of raw materials and supplies, P42,300.(b) Purchase of special materials for newJob No. 207,...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT