Question

Exercise 2-12A Your answer is partially correct. Try again. Patel Company issued 105,800 shares of $1 par value common stock market value of $6/share) for the net assets of Seely Company on January 1, 2014, in a statutory merger. Seely Company had the following assets, liabilities, and owners' equity at that time: Cash Accounts receivable Inventory (LIFO) Land Plant assets (net) Total assets Book Value Tax Basis $19,430 116,690 84,490 27,440 391,530 $639,580 Fair Value Difference $19,430 $-0- 116,690 -0- 139,930 55,440 52,910 25,470 466,430 74,900 $795,390 $9,210 58,750 183,200 $-0- -0- (20,800) Allowance for uncollectible accounts Accounts payable Bonds payable Common stock, $1 par value Other contributed capital Retained earnings Total equities $9,210 58,750 204,000 80,920 135,140 151,560 $639,580 Prepare the journal entry to record the assets acquired and liabilities assumed. Assume an income tax rate of 30%. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Page No. Date : 1 Sol Alc Title Debit Credit 19430 Cash Acc. Receivable Inventory Land Plant Asset Goodwill (BIC) Allowance for Uncall table Account Payable 116690 13 9930 52910 466430 102160 © Bonds Payable 58750 183200 204000 106800 Common Stock (105800 x$1) Share 529000 A ddifional Paid up cap (105800 sh. X $5) Explanation Amt Shown in Allowanu for uncollectable will beo" because account receivable's Book Value & Fair value are same and there is no need of provision. at Amt of Bond payable shall be shown at Book Value le $204000 because Co has to Book valu & not at fair value (③ Amount of G/W will be equal to total of Credit Less total of Debit