Determine the amounts that Company M would report in its post-acquisition balance sheet .

Question

Want to see more full solutions like this?

Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 2, Problem 28P

a.

To determine

Determine the amounts that Company M would report in its post-acquisition balance sheet.

a.

Expert Solution

Explanation of Solution

The amounts that Company M would report in its post-acquisition balance sheet are as follows:

Particulars	Company C	Company K
Cash	$ 18,000 (1)	$ 20,000
Receivables	$ 270,000	$ 90,000
Inventory	$ 360,000	$ 140,000
Land	$ 200,000	$ 180,000
Buildings (net)	$ 420,000	$ 220,000
Equipment (net)	$ 160,000	$ 50,000
Investment in Company T	$ 515,000 (2)

Total assets	$ 1,943,000	$ 700,000

Accounts payable	$ (150,000)	$ (40,000)
Long-term liabilities	$ (630,000)	$ (200,000)
Common stock	$ (130,000)	$ (120,000)
Additional paid-in capital	$ (528,000) (3)	$ -
Retained earnings, 1/1/18	$ (505,000) (4)	$ (340,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)

Table: (1)

Working note:

Calculation of cash:

Cash = Book value of cash in books of M − Stock issuance cost − Acquisition cost= $60,000 − $12,000 − $30,000= $18,000 (1)

Calculation of investment:

Investment in Company T= Fair value of assets and liabilities+ Undervalued assets= $20,000 + $90,000 + $140,000 + $180,000 + $220,000 + $50,000− $40,000 − $200,000 + $55,000= $515,000 (2)

Calculation of Additional paid-in Capital:

Additional paid-in Capital = Additional paid-in Capital of Company M + New Additional paid-in Capital − Stock issuance cost= $360,000 + (20,000 × 9) − $12,000= $528,000 (3)

Calculation of Retained earnings, 1/1/18:

Retained earnings, 1/1/18 = $420,000 + Gain on bargain purchase − Amount paid to lawyers= $420,000 + $115,000 − $30,000= $505,000 (4)

b.

To determine

Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

b.

Expert Solution

Explanation of Solution

The worksheet to consolidate the balance sheets of these two companies as of January 1, 2018 is as follows:

Particulars	Company C	Company K	Consolidated Entries		Consolidated Balances
Cash	$ 18,000	$ 20,000			$ 38,000
Receivables	$ 270,000	$ 90,000			$ 360,000
Inventory	$ 360,000	$ 140,000	$ 5,000		$ 505,000
Land	$ 200,000	$ 180,000	$ 20,000		$ 400,000
Buildings (net)	$ 420,000	$ 220,000	$ 30,000		$ 670,000
Equipment (net)	$ 160,000	$ 50,000			$ 210,000
Investment in Company T	$ 515,000			$ 460,000
				$ 55,000	$ -
Total assets	$ 1,943,000	$ 700,000			$ 2,183,000

Accounts payable	$ (150,000)	$ (40,000)			$ (190,000)
Long-term liabilities	$ (630,000)	$ (200,000)			$ (830,000)
Common stock	$ (130,000)	$ (120,000)	$ 120,000		$ (130,000)
Additional paid-in capital	$ (528,000)	$ -			$ (528,000)
Retained earnings, 1/1/18	$ (505,000)	$ (340,000)	$ 340,000		$ (505,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)	$ 515,000	$ 515,000	$ (2,183,000)

Table: (2)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

On January 1, 2021, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $310,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $27,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Marshall CompanyBook Value Tucker CompanyBook Value Cash $ 69,600 $ 27,600 Receivables 302,000 115,000 Inventory 432,000 224,000 Land 293,000 259,000 Buildings (net) 435,000 276,000 Equipment (net) 212,000 70,200 Accounts payable (168,000 ) (53,100 ) Long-term liabilities (507,000 ) (310,000 ) Common stock—$1 par value (110,000 ) Common stock—$20 par value…

On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $200,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs.Prior to these transactions, the balance sheets for the two companies were as follows:In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary’s books: Inventory by $5,000, Land by $20,000, and Buildings by $30,000. Marshall plans to maintain Tucker’s separate legal identity and to operate Tucker as a wholly owned subsidiary.a. Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts…

On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $200,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $20 per share. Marshall paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Marshall Company Book Value Tucker Company Book Value Cash $ 60,000 $ 20,000 Receivables 270,000 90,000 Inventory 360,000 140,000 Land…

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 2, Problem 28P

a.

To determine

Determine the amounts that Company M would report in its post-acquisition balance sheet.

a.

Expert Solution

Explanation of Solution

The amounts that Company M would report in its post-acquisition balance sheet are as follows:

Particulars	Company C	Company K
Cash	$ 18,000 (1)	$ 20,000
Receivables	$ 270,000	$ 90,000
Inventory	$ 360,000	$ 140,000
Land	$ 200,000	$ 180,000
Buildings (net)	$ 420,000	$ 220,000
Equipment (net)	$ 160,000	$ 50,000
Investment in Company T	$ 515,000 (2)

Total assets	$ 1,943,000	$ 700,000

Accounts payable	$ (150,000)	$ (40,000)
Long-term liabilities	$ (630,000)	$ (200,000)
Common stock	$ (130,000)	$ (120,000)
Additional paid-in capital	$ (528,000) (3)	$ -
Retained earnings, 1/1/18	$ (505,000) (4)	$ (340,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)

Table: (1)

Working note:

Calculation of cash:

Cash = Book value of cash in books of M − Stock issuance cost − Acquisition cost= $60,000 − $12,000 − $30,000= $18,000 (1)

Calculation of investment:

Investment in Company T= Fair value of assets and liabilities+ Undervalued assets= $20,000 + $90,000 + $140,000 + $180,000 + $220,000 + $50,000− $40,000 − $200,000 + $55,000= $515,000 (2)

Calculation of Additional paid-in Capital:

Additional paid-in Capital = Additional paid-in Capital of Company M + New Additional paid-in Capital − Stock issuance cost= $360,000 + (20,000 × 9) − $12,000= $528,000 (3)

Calculation of Retained earnings, 1/1/18:

Retained earnings, 1/1/18 = $420,000 + Gain on bargain purchase − Amount paid to lawyers= $420,000 + $115,000 − $30,000= $505,000 (4)

b.

To determine

Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

b.

Expert Solution

Explanation of Solution

The worksheet to consolidate the balance sheets of these two companies as of January 1, 2018 is as follows:

Particulars	Company C	Company K	Consolidated Entries		Consolidated Balances
Cash	$ 18,000	$ 20,000			$ 38,000
Receivables	$ 270,000	$ 90,000			$ 360,000
Inventory	$ 360,000	$ 140,000	$ 5,000		$ 505,000
Land	$ 200,000	$ 180,000	$ 20,000		$ 400,000
Buildings (net)	$ 420,000	$ 220,000	$ 30,000		$ 670,000
Equipment (net)	$ 160,000	$ 50,000			$ 210,000
Investment in Company T	$ 515,000			$ 460,000
				$ 55,000	$ -
Total assets	$ 1,943,000	$ 700,000			$ 2,183,000

Accounts payable	$ (150,000)	$ (40,000)			$ (190,000)
Long-term liabilities	$ (630,000)	$ (200,000)			$ (830,000)
Common stock	$ (130,000)	$ (120,000)	$ 120,000		$ (130,000)
Additional paid-in capital	$ (528,000)	$ -			$ (528,000)
Retained earnings, 1/1/18	$ (505,000)	$ (340,000)	$ 340,000		$ (505,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)	$ 515,000	$ 515,000	$ (2,183,000)

Table: (2)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 2, Problem 28P

a.

To determine

Determine the amounts that Company M would report in its post-acquisition balance sheet.

a.

Expert Solution

Explanation of Solution

The amounts that Company M would report in its post-acquisition balance sheet are as follows:

Particulars	Company C	Company K
Cash	$ 18,000 (1)	$ 20,000
Receivables	$ 270,000	$ 90,000
Inventory	$ 360,000	$ 140,000
Land	$ 200,000	$ 180,000
Buildings (net)	$ 420,000	$ 220,000
Equipment (net)	$ 160,000	$ 50,000
Investment in Company T	$ 515,000 (2)

Total assets	$ 1,943,000	$ 700,000

Accounts payable	$ (150,000)	$ (40,000)
Long-term liabilities	$ (630,000)	$ (200,000)
Common stock	$ (130,000)	$ (120,000)
Additional paid-in capital	$ (528,000) (3)	$ -
Retained earnings, 1/1/18	$ (505,000) (4)	$ (340,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)

Table: (1)

Working note:

Calculation of cash:

Cash = Book value of cash in books of M − Stock issuance cost − Acquisition cost= $60,000 − $12,000 − $30,000= $18,000 (1)

Calculation of investment:

Investment in Company T= Fair value of assets and liabilities+ Undervalued assets= $20,000 + $90,000 + $140,000 + $180,000 + $220,000 + $50,000− $40,000 − $200,000 + $55,000= $515,000 (2)

Calculation of Additional paid-in Capital:

Additional paid-in Capital = Additional paid-in Capital of Company M + New Additional paid-in Capital − Stock issuance cost= $360,000 + (20,000 × 9) − $12,000= $528,000 (3)

Calculation of Retained earnings, 1/1/18:

Retained earnings, 1/1/18 = $420,000 + Gain on bargain purchase − Amount paid to lawyers= $420,000 + $115,000 − $30,000= $505,000 (4)

b.

To determine

Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

b.

Expert Solution

Explanation of Solution

The worksheet to consolidate the balance sheets of these two companies as of January 1, 2018 is as follows:

Particulars	Company C	Company K	Consolidated Entries		Consolidated Balances
Cash	$ 18,000	$ 20,000			$ 38,000
Receivables	$ 270,000	$ 90,000			$ 360,000
Inventory	$ 360,000	$ 140,000	$ 5,000		$ 505,000
Land	$ 200,000	$ 180,000	$ 20,000		$ 400,000
Buildings (net)	$ 420,000	$ 220,000	$ 30,000		$ 670,000
Equipment (net)	$ 160,000	$ 50,000			$ 210,000
Investment in Company T	$ 515,000			$ 460,000
				$ 55,000	$ -
Total assets	$ 1,943,000	$ 700,000			$ 2,183,000

Accounts payable	$ (150,000)	$ (40,000)			$ (190,000)
Long-term liabilities	$ (630,000)	$ (200,000)			$ (830,000)
Common stock	$ (130,000)	$ (120,000)	$ 120,000		$ (130,000)
Additional paid-in capital	$ (528,000)	$ -			$ (528,000)
Retained earnings, 1/1/18	$ (505,000)	$ (340,000)	$ 340,000		$ (505,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)	$ 515,000	$ 515,000	$ (2,183,000)

Table: (2)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 2, Problem 28P

a.

To determine

Determine the amounts that Company M would report in its post-acquisition balance sheet.

a.

Expert Solution

Explanation of Solution

The amounts that Company M would report in its post-acquisition balance sheet are as follows:

Particulars	Company C	Company K
Cash	$ 18,000 (1)	$ 20,000
Receivables	$ 270,000	$ 90,000
Inventory	$ 360,000	$ 140,000
Land	$ 200,000	$ 180,000
Buildings (net)	$ 420,000	$ 220,000
Equipment (net)	$ 160,000	$ 50,000
Investment in Company T	$ 515,000 (2)

Total assets	$ 1,943,000	$ 700,000

Accounts payable	$ (150,000)	$ (40,000)
Long-term liabilities	$ (630,000)	$ (200,000)
Common stock	$ (130,000)	$ (120,000)
Additional paid-in capital	$ (528,000) (3)	$ -
Retained earnings, 1/1/18	$ (505,000) (4)	$ (340,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)

Table: (1)

Working note:

Calculation of cash:

Cash = Book value of cash in books of M − Stock issuance cost − Acquisition cost= $60,000 − $12,000 − $30,000= $18,000 (1)

Calculation of investment:

Investment in Company T= Fair value of assets and liabilities+ Undervalued assets= $20,000 + $90,000 + $140,000 + $180,000 + $220,000 + $50,000− $40,000 − $200,000 + $55,000= $515,000 (2)

Calculation of Additional paid-in Capital:

Additional paid-in Capital = Additional paid-in Capital of Company M + New Additional paid-in Capital − Stock issuance cost= $360,000 + (20,000 × 9) − $12,000= $528,000 (3)

Calculation of Retained earnings, 1/1/18:

Retained earnings, 1/1/18 = $420,000 + Gain on bargain purchase − Amount paid to lawyers= $420,000 + $115,000 − $30,000= $505,000 (4)

b.

To determine

Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

b.

Expert Solution

Explanation of Solution

The worksheet to consolidate the balance sheets of these two companies as of January 1, 2018 is as follows:

Particulars	Company C	Company K	Consolidated Entries		Consolidated Balances
Cash	$ 18,000	$ 20,000			$ 38,000
Receivables	$ 270,000	$ 90,000			$ 360,000
Inventory	$ 360,000	$ 140,000	$ 5,000		$ 505,000
Land	$ 200,000	$ 180,000	$ 20,000		$ 400,000
Buildings (net)	$ 420,000	$ 220,000	$ 30,000		$ 670,000
Equipment (net)	$ 160,000	$ 50,000			$ 210,000
Investment in Company T	$ 515,000			$ 460,000
				$ 55,000	$ -
Total assets	$ 1,943,000	$ 700,000			$ 2,183,000

Accounts payable	$ (150,000)	$ (40,000)			$ (190,000)
Long-term liabilities	$ (630,000)	$ (200,000)			$ (830,000)
Common stock	$ (130,000)	$ (120,000)	$ 120,000		$ (130,000)
Additional paid-in capital	$ (528,000)	$ -			$ (528,000)
Retained earnings, 1/1/18	$ (505,000)	$ (340,000)	$ 340,000		$ (505,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)	$ 515,000	$ 515,000	$ (2,183,000)

Table: (2)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 2, Problem 28P

a.

To determine

Determine the amounts that Company M would report in its post-acquisition balance sheet.

a.

Expert Solution

Explanation of Solution

The amounts that Company M would report in its post-acquisition balance sheet are as follows:

Particulars	Company C	Company K
Cash	$ 18,000 (1)	$ 20,000
Receivables	$ 270,000	$ 90,000
Inventory	$ 360,000	$ 140,000
Land	$ 200,000	$ 180,000
Buildings (net)	$ 420,000	$ 220,000
Equipment (net)	$ 160,000	$ 50,000
Investment in Company T	$ 515,000 (2)

Total assets	$ 1,943,000	$ 700,000

Accounts payable	$ (150,000)	$ (40,000)
Long-term liabilities	$ (630,000)	$ (200,000)
Common stock	$ (130,000)	$ (120,000)
Additional paid-in capital	$ (528,000) (3)	$ -
Retained earnings, 1/1/18	$ (505,000) (4)	$ (340,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)

Table: (1)

Working note:

Calculation of cash:

Cash = Book value of cash in books of M − Stock issuance cost − Acquisition cost= $60,000 − $12,000 − $30,000= $18,000 (1)

Calculation of investment:

Investment in Company T= Fair value of assets and liabilities+ Undervalued assets= $20,000 + $90,000 + $140,000 + $180,000 + $220,000 + $50,000− $40,000 − $200,000 + $55,000= $515,000 (2)

Calculation of Additional paid-in Capital:

Additional paid-in Capital = Additional paid-in Capital of Company M + New Additional paid-in Capital − Stock issuance cost= $360,000 + (20,000 × 9) − $12,000= $528,000 (3)

Calculation of Retained earnings, 1/1/18:

Retained earnings, 1/1/18 = $420,000 + Gain on bargain purchase − Amount paid to lawyers= $420,000 + $115,000 − $30,000= $505,000 (4)

b.

To determine

Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

b.

Expert Solution

Explanation of Solution

The worksheet to consolidate the balance sheets of these two companies as of January 1, 2018 is as follows:

Particulars	Company C	Company K	Consolidated Entries		Consolidated Balances
Cash	$ 18,000	$ 20,000			$ 38,000
Receivables	$ 270,000	$ 90,000			$ 360,000
Inventory	$ 360,000	$ 140,000	$ 5,000		$ 505,000
Land	$ 200,000	$ 180,000	$ 20,000		$ 400,000
Buildings (net)	$ 420,000	$ 220,000	$ 30,000		$ 670,000
Equipment (net)	$ 160,000	$ 50,000			$ 210,000
Investment in Company T	$ 515,000			$ 460,000
				$ 55,000	$ -
Total assets	$ 1,943,000	$ 700,000			$ 2,183,000

Accounts payable	$ (150,000)	$ (40,000)			$ (190,000)
Long-term liabilities	$ (630,000)	$ (200,000)			$ (830,000)
Common stock	$ (130,000)	$ (120,000)	$ 120,000		$ (130,000)
Additional paid-in capital	$ (528,000)	$ -			$ (528,000)
Retained earnings, 1/1/18	$ (505,000)	$ (340,000)	$ 340,000		$ (505,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)	$ 515,000	$ 515,000	$ (2,183,000)

Table: (2)

Answer 6

Chapter 2, Problem 28P

a.

To determine

Determine the amounts that Company M would report in its post-acquisition balance sheet.

a.

Expert Solution

Explanation of Solution

The amounts that Company M would report in its post-acquisition balance sheet are as follows:

Particulars	Company C	Company K
Cash	$ 18,000 (1)	$ 20,000
Receivables	$ 270,000	$ 90,000
Inventory	$ 360,000	$ 140,000
Land	$ 200,000	$ 180,000
Buildings (net)	$ 420,000	$ 220,000
Equipment (net)	$ 160,000	$ 50,000
Investment in Company T	$ 515,000 (2)

Total assets	$ 1,943,000	$ 700,000

Accounts payable	$ (150,000)	$ (40,000)
Long-term liabilities	$ (630,000)	$ (200,000)
Common stock	$ (130,000)	$ (120,000)
Additional paid-in capital	$ (528,000) (3)	$ -
Retained earnings, 1/1/18	$ (505,000) (4)	$ (340,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)

Table: (1)

Working note:

Calculation of cash:

Cash = Book value of cash in books of M − Stock issuance cost − Acquisition cost= $60,000 − $12,000 − $30,000= $18,000 (1)

Calculation of investment:

Investment in Company T= Fair value of assets and liabilities+ Undervalued assets= $20,000 + $90,000 + $140,000 + $180,000 + $220,000 + $50,000− $40,000 − $200,000 + $55,000= $515,000 (2)

Calculation of Additional paid-in Capital:

Additional paid-in Capital = Additional paid-in Capital of Company M + New Additional paid-in Capital − Stock issuance cost= $360,000 + (20,000 × 9) − $12,000= $528,000 (3)

Calculation of Retained earnings, 1/1/18:

Retained earnings, 1/1/18 = $420,000 + Gain on bargain purchase − Amount paid to lawyers= $420,000 + $115,000 − $30,000= $505,000 (4)

Answer 7

Chapter 2, Problem 28P

a.

To determine

Determine the amounts that Company M would report in its post-acquisition balance sheet.

Answer 8

a.

Expert Solution

Explanation of Solution

The amounts that Company M would report in its post-acquisition balance sheet are as follows:

Particulars	Company C	Company K
Cash	$ 18,000 (1)	$ 20,000
Receivables	$ 270,000	$ 90,000
Inventory	$ 360,000	$ 140,000
Land	$ 200,000	$ 180,000
Buildings (net)	$ 420,000	$ 220,000
Equipment (net)	$ 160,000	$ 50,000
Investment in Company T	$ 515,000 (2)

Total assets	$ 1,943,000	$ 700,000

Accounts payable	$ (150,000)	$ (40,000)
Long-term liabilities	$ (630,000)	$ (200,000)
Common stock	$ (130,000)	$ (120,000)
Additional paid-in capital	$ (528,000) (3)	$ -
Retained earnings, 1/1/18	$ (505,000) (4)	$ (340,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)

Table: (1)

Working note:

Calculation of cash:

Cash = Book value of cash in books of M − Stock issuance cost − Acquisition cost= $60,000 − $12,000 − $30,000= $18,000 (1)

Calculation of investment:

Investment in Company T= Fair value of assets and liabilities+ Undervalued assets= $20,000 + $90,000 + $140,000 + $180,000 + $220,000 + $50,000− $40,000 − $200,000 + $55,000= $515,000 (2)

Calculation of Additional paid-in Capital:

Additional paid-in Capital = Additional paid-in Capital of Company M + New Additional paid-in Capital − Stock issuance cost= $360,000 + (20,000 × 9) − $12,000= $528,000 (3)

Calculation of Retained earnings, 1/1/18:

Retained earnings, 1/1/18 = $420,000 + Gain on bargain purchase − Amount paid to lawyers= $420,000 + $115,000 − $30,000= $505,000 (4)

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

To determine

Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

b.

Expert Solution

Explanation of Solution

The worksheet to consolidate the balance sheets of these two companies as of January 1, 2018 is as follows:

Particulars	Company C	Company K	Consolidated Entries		Consolidated Balances
Cash	$ 18,000	$ 20,000			$ 38,000
Receivables	$ 270,000	$ 90,000			$ 360,000
Inventory	$ 360,000	$ 140,000	$ 5,000		$ 505,000
Land	$ 200,000	$ 180,000	$ 20,000		$ 400,000
Buildings (net)	$ 420,000	$ 220,000	$ 30,000		$ 670,000
Equipment (net)	$ 160,000	$ 50,000			$ 210,000
Investment in Company T	$ 515,000			$ 460,000
				$ 55,000	$ -
Total assets	$ 1,943,000	$ 700,000			$ 2,183,000

Accounts payable	$ (150,000)	$ (40,000)			$ (190,000)
Long-term liabilities	$ (630,000)	$ (200,000)			$ (830,000)
Common stock	$ (130,000)	$ (120,000)	$ 120,000		$ (130,000)
Additional paid-in capital	$ (528,000)	$ -			$ (528,000)
Retained earnings, 1/1/18	$ (505,000)	$ (340,000)	$ 340,000		$ (505,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)	$ 515,000	$ 515,000	$ (2,183,000)

Table: (2)

Answer 13

b.

To determine

Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

Answer 14

b.

Expert Solution

Explanation of Solution

The worksheet to consolidate the balance sheets of these two companies as of January 1, 2018 is as follows:

Particulars	Company C	Company K	Consolidated Entries		Consolidated Balances
Cash	$ 18,000	$ 20,000			$ 38,000
Receivables	$ 270,000	$ 90,000			$ 360,000
Inventory	$ 360,000	$ 140,000	$ 5,000		$ 505,000
Land	$ 200,000	$ 180,000	$ 20,000		$ 400,000
Buildings (net)	$ 420,000	$ 220,000	$ 30,000		$ 670,000
Equipment (net)	$ 160,000	$ 50,000			$ 210,000
Investment in Company T	$ 515,000			$ 460,000
				$ 55,000	$ -
Total assets	$ 1,943,000	$ 700,000			$ 2,183,000

Accounts payable	$ (150,000)	$ (40,000)			$ (190,000)
Long-term liabilities	$ (630,000)	$ (200,000)			$ (830,000)
Common stock	$ (130,000)	$ (120,000)	$ 120,000		$ (130,000)
Additional paid-in capital	$ (528,000)	$ -			$ (528,000)
Retained earnings, 1/1/18	$ (505,000)	$ (340,000)	$ 340,000		$ (505,000)
Total liabilities and equity	$ (1,943,000)	$ (700,000)	$ 515,000	$ 515,000	$ (2,183,000)