Question

Savod Help Save & Exit Subm Pintime Industries Inc. entered into a business combination agreement with Sydrolized Chemical Corporation (SCC) to ensure an uninterrupted supply of key raw materials and to realize certain economies from combining the operating processes and the marketing efforts of the two companies Under the terms of the agreement, Pintime issued 180,300 shares of its $2 par common stock in exchange for all of SCC's assets and liabilities. The Pintime shares then were distributed to SCC's shareholders, and SCC was liquidated. Immediately prior to the combination, SCC's balance sheet appeared as follows, with fair values also indicated: Book Values Fair Values $ 28,000 233,800 $ 28,000 240,000 (6,200) 371,000 132,000 50,000 122,000 2,423,000 (596,000) 110,000 95,700 $2,977,500 385,000 157,000 96,000 47,000 2,495,000 488,000 98,200 $4,028,000 Assets Cash Accounts Receivable Less: Allowance for Bad Debts Inventory Long-Term Investments Land Rolling Stock Plant & Equipment Less: Accumulated Depreciation Patents Special Licenses Total Assets Liabilities Current Payables Mortgages Payable Equipment Trust Notes Debentures Payable Less: Discount on Debentures Total Liabilities Stockholders Equity Common Stock ($6 par) Additional Paid-In Capital from Common Stock Additional Paid-In Capital from Retirement of Preferred Stock Retained Earnings Less: Treasury Stock (1,000 shares) Total Liabilities & Equity $ 137,400 508,000 108,000 1,030,000 (50,000) $1,733,400 $ 137,400 528,000 103,000 980,000 $1,748,400 582,000 588,000 19,000 149, 100 (14,000) $2,977,500

Answer 1

EVENT	JOURNAL	DR.	CR.
1.Aquiring assets & liab	cash	28,000
	a/c recevable	233,800
	inventory	385,000
	long term investment	157,000
	land	96,000
	rolling stock	47,000
	plant & equipment	2,495,000
	patents	488,000
	special license	98,200
	goodwill(balancing figure)	424,900
	To current payables		137,400
	To mortgages payables		528,000
	To euip trust notes		103,000
	To debentures		980,000
	To purchase consideration		2,704,500
	(180300*2)
2.issuing shares	purchase consideration	2704500
	To shares (180300*2)		360600
	To premium on shares		2343900
3. other cost	Direct cost	137000
	Registration cost	48000
	To business combination expenses		185000
4. payment of other cost	Business combination expenses	185000
	To bank a/c		185000