Question

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

	Book Value			Fair Value
Inventory	$	398,500		$	359,500
Land		823,500			1,137,750
Buildings		1,965,000			2,330,250
Customer relationships		0			842,250
Accounts payable		(113,500	)		(113,500	)
Common stock		(2,000,000	)
Additional paid-in capital		(500,000	)
Retained earnings 1/1		(399,500	)
Revenues		(486,000	)
Expenses		312,000

Arturo pays cash of $4,422,250 to acquire Westmont. No stock is issued and Arturo pays $51,400 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.)

Answer 1

Account Title & Explanation 19 20 21 Debit 359,500 1,137,750 2,330,250 842,250 Credit Inventory Land Buildings Customer Relationships 23 24 25 26 27 28 29 30 31 32 Accounts Payable Cash Gain on Bargain Purchase 113,500 4,422,250 134,000 To recod acquisition of Westmont Company) Professional Service Expense To record legal fees related to the combination) 51,400 Cash 51,400