Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,000 shares of Pamrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows: Balance Sheet Items Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Total Assets Liabilities and Equities Accounts Payable Bonds Payable Common Stock: $20 par value $5 par value Additional Paid-In Capital Retained Earnings Total Liabilities and Equities Pamrod Manufacturing Book Value Fair Value $ 70,000 100,000 200,000 50,000 600,000 (250,000) $ 770,000 $ 50,000 300,000 200,000 40,000 180,000 $ 770,000 } $ 70,000 100,000 375,000 80,000 540,000 $1,165,000 $ 50,000 310,000 $ Stafford Industries Book Value 30,000 60,000 100,000 40,000 400,000 (150,000) $ 480,000 $ 10,000 150,000 100,000 20,000 200,000 $ 480,000 Fair Value $ 30,000 60,000 160,000 30,000 350,000 $630,000 $ 10,000 145,000 Pamrod shares were selling for $150 on the date of acquisition. Required: a. Prepare a Journal entry to record the acquisition in Pamrod's books. b. Prepare a balance sheet for the combined enterprise immediately following the business combination.
Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,000 shares of Pamrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows: Balance Sheet Items Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Total Assets Liabilities and Equities Accounts Payable Bonds Payable Common Stock: $20 par value $5 par value Additional Paid-In Capital Retained Earnings Total Liabilities and Equities Pamrod Manufacturing Book Value Fair Value $ 70,000 100,000 200,000 50,000 600,000 (250,000) $ 770,000 $ 50,000 300,000 200,000 40,000 180,000 $ 770,000 } $ 70,000 100,000 375,000 80,000 540,000 $1,165,000 $ 50,000 310,000 $ Stafford Industries Book Value 30,000 60,000 100,000 40,000 400,000 (150,000) $ 480,000 $ 10,000 150,000 100,000 20,000 200,000 $ 480,000 Fair Value $ 30,000 60,000 160,000 30,000 350,000 $630,000 $ 10,000 145,000 Pamrod shares were selling for $150 on the date of acquisition. Required: a. Prepare a Journal entry to record the acquisition in Pamrod's books. b. Prepare a balance sheet for the combined enterprise immediately following the business combination.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,000 shares of
Pamrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows:
Balance Sheet Items
Assets
Cash
Accounts Receivable
Inventory
Land
Buildings and Equipment
Less: Accumulated Depreciation
Total Assets
Liabilities and Equities
Accounts Payable
Bonds Payable
Common Stock:
$20 par value
$5 par value
Additional Paid-In Capital
Retained Earnings
Total Liabilities and Equities
Pamrod Manufacturing
Book Value Fair Value
$ 70,000
100,000
200,000
50,000
600,000
(250,000)
$ 770,000
$ 50,000
300,000
200,000
40,000
180,000
$ 770,000
}
$ 70,000
100,000
375,000
80,000
540,000
$1,165,000
$ 50,000
310,000
Stafford Industries
Book Value
$ 30,000
60,000
100,000
40,000
400,000
(150,000)
$ 480,000
$ 10,000
150,000
100,000
20,000
200,000
$ 480,000
}
Fair Value
$ 30,000
60,000
160,000
30,000
350,000
$630,000
$ 10,000
145,000
Pamrod shares were selling for $150 on the date of acquisition.
Required:
a. Prepare a Journal entry to record the acquisition in Pamrod's books.
b. Prepare a balance sheet for the combined enterprise immediately following the business combination.
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