Question

On June 30, 2020, Wisconsin, Inc., issued $344,050 in debt and 19,100 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): 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 Wisconsin $ (1,059,000) 734,000 $ (325,000) $ (846,000) (325,000) 111,250 $(1,059,750) $ 78,750 478,000 931,000 721,000 $ 2,208,750 $ (519,000) (360,000) (270,000) (1,059,750) $(2,208,750) Badger $ (454,000) 263,000 $ (191,000) $ (259,000) (191,000) 0 $ (450,000) $ 175,000 285,000 307,000 606,000 $ 1,373,000 $ (453,000) (200,000) (270,000) (450,000) $(1,373,000) Wisconsin also paid $36,000 to a broker for arranging the transaction. In addition, Wisconsin paid $48,400 in stock issuance costs. Badger's equipment was actually worth $768,750, but its patented technology was valued at only $282,100. What are the consolidated balances for the following accounts? (Input all amounts as positive values) Accounts Amounts a. Net income b. Retained earnings, 1/1/20 c. Patented technology (net) d. Goodwill e. Liabilities f. Common stock g. Additional paid-in capital

Answer 1

	Amount in $
a.)	Net Income	289,000	(325,000 - 36,000)
b.)	Retained earnings 1/1/20	846,000
c.)	Patented technology (net )	1,213,100	(931,000 + 282,100)
d.)	Goodwill	50,200	Working below
e.)	Liabilities	1,316,050	(519,000 + 453,000 + 344,050)
f.)	Common stock	551,000	(360,000 + (19,100 x 10) )
g.)	Additional paid in capital	794,600	(270,000 + (19,100 x 30) - 48,400)

Working
Goodwill		Amount in $
Purchase Consideration		1,108,050
(344,050 + (19,100 x 40) )
Less: Net assets
Book value	920,000
(200,000 + 270,000 + 450,000 )
Add: Fair value in excess of book value of Equipment	162,750
(768,750 - 606,000)
Less: Fair value in short of book value of patented technology	24,900
( 307,000 - 282,100)		1,057,850
Goodwill		50,200