Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 2, Problem 27P
To determine
Find the consolidated balances for the following accounts.
a. Net income
b.
c. Patented technology
d.
e. Liabilities
f. Common stock
g. Additional paid-in capital.
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On June 30, 2020, Wisconsin, Inc., issued $315,450 in debt and 18,100 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2020, were as follows (credit balances in parentheses):
Wisconsin
Badger
Revenues
$
(985,000
)
$
(462,000
)
Expenses
707,000
293,000
Net income
$
(278,000
)
$
(169,000
)
Retained earnings, 1/1
$
(801,000
)
$
(236,000
)
Net income
(278,000
)
(169,000
)
Dividends declared
105,000
0
Retained earnings, 6/30
$
(974,000
)
$
(405,000
)
Cash
$
42,000
$
79,000
Receivables and inventory
413,000
216,000
Patented technology (net)
911,000
347,000
Equipment (net)
739,000
664,000
Total assets
$
2,105,000
$…
On June 30, 2017, Wisconsin, Inc., issued $300,000 in debt and 15,000 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2017, were as follows:
Wisconsin
Badger
Revenues
$ (900,000)
$ (300,000)
Expenses
660,000
200,000
Net income
$ (240,000)
$ (100,000)
Retained earnings, 1/1
$ (800,000)
$ (200,000)
Net income
(240,000)
(100,000)
Dividends declared
90,000
–0–
Retained earnings, 6/30
$ (950,000)
$ (300,000)
Cash
$ 80,000
$ 110,000
page 81
Receivables and inventory
400,000
170,000
Patented technology (net)
900,000
300,000
Equipment (net)
700,000
600,000
Total assets…
On June 30, 2017, Wisconsin, Inc., issued $300,000 in debt and 15,000 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2017, were as follows:Wisconsin also paid $30,000 to a broker for arranging the transaction. In addition, Wisconsin paid $40,000 in stock issuance costs. Badger’s equipment was actually worth $700,000, but its patented technology was valued at only $280,000.What are the consolidated balances for the following accounts?a. Net income.b. Retained earnings, 1/1/17.c. Patented technology.d. Goodwill.e. Liabilities.f. Common stock.g. Additional paid-in capital.
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1QCh. 2 - Describe the concept of a synergy. What are some...Ch. 2 - Prob. 3QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 39APBCh. 2 - Prob. 40APB
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- On June 30, 2020, Wisconsin, Inc., issued $267,350 in debt and 18,400 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2020, were as follows (credit balances in parentheses): Wisconsin Badger Revenues $ (985,000 ) $ (339,000 ) Expenses 720,000 201,000 Net income $ (265,000 ) $ (138,000 ) Retained earnings, 1/1 $ (843,000 ) $ (208,000 ) Net income (265,000 ) (138,000 ) Dividends declared 106,250 0 Retained earnings, 6/30 $ (1,001,750 ) $ (346,000 ) Cash $ 110,750 $ 59,000 Receivables and inventory 433,000 180,000 Patented technology (net) 929,000 372,000 Equipment (net) 727,000 619,000 Total assets $ 2,199,750 $…arrow_forwardOn June 30, 2020, Wisconsin, Inc., issued $92,400 in debt and 23,400 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2020, were as follows (credit balances in parentheses): Wisconsin Badger Revenues $ (944,000 ) $ (443,000 ) Expenses 686,000 287,000 Net income $ (258,000 ) $ (156,000 ) Retained earnings, 1/1 $ (853,000 ) $ (207,000 ) Net income (258,000 ) (156,000 ) Dividends declared 110,000 0 Retained earnings, 6/30 $ (1,001,000 ) $ (363,000 ) Cash $ 58,000 $ 154,000 Receivables and inventory 442,000 171,000 Patented technology (net) 923,000 329,000 Equipment (net) 723,000 655,000 Total assets $ 2,146,000 $…arrow_forwardOn June 30, 2020, Wisconsin, Inc., issued $147,900 in debt and 20,400 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2020, were as follows (credit balances in parentheses): Wisconsin Badger Revenues $ (930,000 ) $ (331,000 ) Expenses 663,000 210,000 Net income $ (267,000 ) $ (121,000 ) Retained earnings, 1/1 $ (809,000 ) $ (216,000 ) Net income (267,000 ) (121,000 ) Dividends declared 114,250 0 Retained earnings, 6/30 $ (961,750 ) $ (337,000 ) Cash $ 69,750 $ 118,000 Receivables and inventory 461,000 194,000 Patented technology (net) 911,000 321,000 Equipment (net) 720,000 650,000 Total assets $ 2,161,750 $…arrow_forward
- On June 30, 2020, Wisconsin, Inc., issued $147,900 in debt and 20,400 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2020, were as follows (credit balances in parentheses): Wisconsin Badger Revenues $ (930,000 ) $ (331,000 ) Expenses 663,000 210,000 Net income $ (267,000 ) $ (121,000 ) Retained earnings, 1/1 $ (809,000 ) $ (216,000 ) Net income (267,000 ) (121,000 ) Dividends declared 114,250 0 Retained earnings, 6/30 $ (961,750 ) $ (337,000 ) Cash $ 69,750 $ 118,000 Receivables and inventory 461,000 194,000 Patented technology (net) 911,000 321,000 Equipment (net) 720,000 650,000 Total assets $ 2,161,750 $…arrow_forwardOn June 30, 2023, Wisconsin, Incorporated, issued $108,650 in debt and 24,200 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2023, were as follows (credit balances in parentheses): Items Wisconsin Badger Revenues $ (1,018,000) $ (378,000) Expenses 744,000 253,000 Net income $ (274,000) $ (125,000) Retained earnings, 1/1 $ (842,000) $ (282,000) Net income (274,000) (125,000) Dividends declared 104,500 0 Retained earnings, 6/30 $ (1,011,500) $ (407,000) Cash $ 39,500 $ 158,000 Receivables and inventory 469,000 267,000 Patented technology (net) 903,000 308,000 Equipment (net) 782,000 611,000 Total assets $ 2,193,500 $ 1,344,000 Liabilities $ (552,000) $ (467,000) Common stock (360,000) (200,000) Additional…arrow_forwardOn June 30, 2020, Wisconsin, Inc., issued $153,400 in debt and 22,200 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2020, were as follows (credit balances in parentheses): Wisconsin $ (1,077,000) 759,000 $ (318,000) $(839,000) (318,000) 110,750 $(1,046, 250) Badger $ (397,000) 200,000 Revenues Expenses $ (197,000) $ (213,000) (197,000) Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 6/30 $ (410,000) $ 197,250 423,000 915,000 737,000 $ 2,272,250 $ (596,000) (360,000) (270,000) (1,046, 250) $(2,272,250) Cash Receivables and inventory Patented technology (net) Equipment (net) 166,000 171,000 364,000 609,000 $ 1,310,000 $ (430,000) (200,000) (270,000) (410, 000) $(1,310,000) Total assets Liabilities Common…arrow_forward
- On June 30, 2020, Wisconsin, Inc., issued $158,100 in debt and 21,600 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2020, were as follows (credit balances in parentheses): Revenues Expenses Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 6/30 Cash Receivables and inventory Patented technology (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings Total liabilities and equities Accounts a.Net income b. Retained earnings. 1/1/20 e Patented technology (net) d. Goodwill Liabilities Common stock 9. Additional paid-in capital Wisconsin S (983,000) 687,000 Amounts $ (296,000) $ (892,000) (296,000) 102,250 $(1,085,750) $ 187,750 418,000 987,000 706,000 $ 2,298,750 3…arrow_forwardes On June 30, 2023, Wisconsin, Incorporated, issued $143,250 in debt and 24,100 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2023, were as follows (credit balances in parentheses): Revenues Expenses Net income Items Retained earnings, 1/1 Net income Dividends declared Retained earnings, 6/30 Cash Receivables and inventory Patented technology (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings Total liabilities and equities Wisconsin $ (1,083,000) 746,000 $ (337,000) $ (847,000) (337,000) 110,000 $ (1,074,000) $ 147,000 441,000 967,000 705,000 $ 2,260,000 $ (556,000) (360,000) (270,000) (1,074,000) Badger $ (450,000) 259,000 $ (191,000) $ (274,000) (191,000) 0 $ (465,000) $ 153,000…arrow_forwardOn 1 October 2018, KING acquired 30,000 of VAM's 100,000 shares in exchange for 75,000 of its own shares. The market value of KING's shares at the date of this share exchange was $3.20 per share. VAM's net profit for the financial year ended 31 March 2019 was $200,000. $40,000 of this profit was made by VAM from 1 April 2018 to 30 September 2018. VAM is the only associate of KING. What amount will be shown as 'investment in associate' in the consolidated statement of financial position of KING as at 31 March 2019? Please provide explaination. A) $288,000 B) $300,000 C) $156,000 D) $252,000 E) None of the abovearrow_forward
- Lexington Co. has the following securities outstanding on December 31, 2017 (its first year of operations). Cost Fair Value Greenspan Corp. stock $20,000 $19,000 Summerset Company stock 9,500 8,800 Tinkers Company stock 20,000 20,600 $49,500 $48,400 During 2018, Summerset Company stock was sold for $9,200, the difference between the $9,200 and the “fair value” of $8,800 being recorded as a “Gain on Sale of Investments.” The market price of the stock on December 31, 2018, was Greenspan Corp. stock $19,900; Tinkers Company stock $20,500.Instructions(a) What justification is there for valuing equity securities at fair value and reporting the unrealized gain or loss as part of net income?(b) How should Lexington Co. report this information in its financial statements at December 31, 2017? Explain.(c) Did Lexington Co. properly account for the sale of the Summerset Company stock? Explain.(d) Are there any additional entries necessary for Lexington Co. at December 31,…arrow_forwardOn December 31, 2017, Alexander Company had $1,200,000 of short-term debt in the form of notes payable due February 2, 2018. On January 21, 2018, the company issued 25,000 ordinary shares for $36 per share, receiving $900,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2018, the proceeds from the share sale, supplemented by an additional $300,000 cash, are used to liquidate the $1,200,000 debt. The December 31, 2017, statement of financial position isauthorized for issue on February 23, 2018.InstructionsShow how the $1,200,000 of short-term debt should be presented on the December 31, 2017, statement of financial position.arrow_forwardOn July 1, 2014, Pipe 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. Pipe 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: Required:Prepare the journal entry on Pipe Corporation's books to account for the investment in Sector Inc.arrow_forward
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