Exercise 3-3 On January 2, 2014, Prunce Company acquired 90% of the outstanding common stock of...

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Exercise 3-3

On January 2, 2014, Prunce Company acquired 90% of the outstanding common stock of Sun Company for $178,050 cash. Just before the acquisition, the balance sheets of the two companies were as follows:

	*Prunce*	*Sun*
Cash	$263,470	$ 60,730
Accounts receivable (net)	143,210	22,500
Inventory	110,480	56,650
Plant and equipment (net)	414,170	101,680
Land	59,220	29,600
Total asset	$990,550	$271,160

Accounts payable	$111,630	$ 50,670
Mortgage payable	67,840	40,000
Common stock, $2 par value	416,700	69,670
Other contributed capital	207,200	19,600
Retained earnings	187,180	91,220
Total equities	$990,550	$271,160

The fair values of Sun Company’s assets and liabilities are equal to their book values with the exception of land.

(a)


	Your answer is correct.

Prepare a journal entry to record the purchase of Sun Company’s common stock. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
Investment in Sun Company	178,050
Cash		178,050

CES (b) Prepare a consolidated balance sheet at the date of acquisition. (Round answers to o decimal plac PRUNCE COMPANY AND

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Exercise 3-3 On January 2, 2014, Prunce Company acquired 90% of the outstanding common stock of...

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