Question

On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $318,000 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 $25,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $10,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/18 Marshall Tucker Company Company Book Value Book Value $ 71,700 $ 39,800 290,000 150,000 432,000 225,000 285,000 240,000 475,000 252,000 174,000 64,800 (229,000) (58,500) (517,000) (318,000) (110,000) (120,000) (360,000) 0 (511,700) (475,100) Note: Parentheses indicate a credit balance. In Marshall's appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary's books: Inventory by $8,350, Land by $25,000, and Buildings by $41,000. Marshall plans to maintain Tucker's separate legal identity and to operate Tucker as a wholly owned subsidiary.

Answer 1

Marshall Company and Consolidated Subsidiary
Worksheet
			Consolidated Entries
Accounts	Marshall	Trucker	Debit	Credit	Consolidated Total
Cash	71,700	39,800			111,500
Recievables	290,000	150,000			440,000
Inventory	432,000	225,000	8,350		665,350
Land	285,000	240,000	25,000		550,000
Buildings	475,000	252,000	41,000		768,000
Equipment	174,000	64,800	-		238,800
Investment in Trucker	338,000			263,650	74,350
Total Assets	2,065,700	971,600	74,350	263,650	2,848,000
Accounts Payable	229,000	58,500	-		287,500
Long Term Liabilities	835,000	318,000			1,153,000
Common Stock	110,000	120,000			230,000
Addition in Capital	360,000			20,000	380,000
Retained Earnings	511,700	475,100	263,650	74,350	797,500
Total Liabilities and owners equity	2,045,700	971,600	263,650	94,350	2,848,000