On July 1, 2020, Martinez Corporation purchased Young Company by paying $259,000 cash and issuing a $128,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows. Cash   $50,400   Accounts payable   $206,000 Accounts receivable   89,500   Stockholders’ equity   238,500 Inventory   105,000       $444,500 Land   41,500         Buildings (net)   75,300         Equipment (net)   70,900         Trademarks   11,900             $444,500         The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $126,100), and trademarks (fair value of $15,680). Prepare the July 1 entry for Martinez Corporation to record the purchase.  Prepare the December 31 entry for Martinez Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,440

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On July 1, 2020, Martinez Corporation purchased Young Company by paying $259,000 cash and issuing a $128,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.

Cash
 
$50,400
 
Accounts payable
 
$206,000
Accounts receivable
 
89,500
 
Stockholders’ equity
 
238,500
Inventory
 
105,000
     
$444,500
Land
 
41,500
       
Buildings (net)
 
75,300
       
Equipment (net)
 
70,900
       
Trademarks
 
11,900
       
   
$444,500
       


The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $126,100), and trademarks (fair value of $15,680).

Prepare the July 1 entry for Martinez Corporation to record the purchase. 

Prepare the December 31 entry for Martinez Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,440

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