Question

December 31, 2017, Sallie Ltd. (Purchase) acquires all of the assets and liabilities of Jimmie Dean Ltd. by issuing 40,000 Sallie common shares. Before the transaction, Sallie had 160,000 common shares outstanding. The market share of Sallie's stock is $30 with a par value of $10. After the transaction, 200,000 Sallie shares are outstanding, lirnrmie Dean will dissolve. The pre transaction balance sheets are the following Provide the appropriate journal entries and construct the new balance sheet for the surviving entity Sallie Sallie 1,000,000.00 50,000.00 2,000,000.00150,000.00 Jimmie Dean Fair Value Jimmie Dean Cash Accounts Recievable Inventory 200,000.00 50,000.00 300,000 3,000,000.00 500,000.00 Accumulated Depreciaion(1,200,000.00) (150,000.00) 6.000.000.00900.00o.00 60,000.00 140,000.00 70,000.00 350,000.00 500,000.00 (150,000.00) Land 1,D00,000.00 Builidings and Equipment Total Assets Accounts Payble Notes Payable Common Shares APIC Retained Earnings 1,000,000.00 100,000.00 400,000.00 200,000.00 10,000.00 1,000,000.00 190,000.00 2,000,000.00 400,000.00 6.000.000.00900.00o.00 100,000.00 225,000.00 1,600,000.00

Answer 1

	For Business Purchase
			Debit Amount	Credit Amount
	Cash A/c	Dr	60,000.00
	Accounts Receivables A/c	Dr	140,000.00
	Inventory A/c	Dr	70,000.00
	Land A/c	Dr	500,000.00
	Building & Equipment A/c	Dr	350,000.00
	To Accounts Payable			100,000.00
	To Notes Payable			225,000.00
	To Accumulated Depreciation A/c			150,000.00
	To Business Purchase A/c			645,000.00
	(Being business purchase entry made)
	For Consideration Paid
			Debit Amount	Credit Amount
	Business Purchase A/c	Dr	645,000.00
	Goodwill a/c	Dr	555,000.00
	To Common Stock			400,000.00
	To Share Premium A/c			800,000.00
	(Consideration paid and goodwill account)
	Assets		Consolidated
	Cash		1,060,000.00
	Accounts Receivable		2,140,000.00
	Inventory		270,000.00
	Goodwill		555,000.00
	Land		1,350,000.00
	Buildings and Equipment		3,500,000.00
	Accumulated Depreciation		(1,350,000.00)
	Total Assets		7,525,000.00
	Liabilities
	Accounts Payable		1,100,000.00
	Notes Payable		625,000.00
	Common Shares		2,000,000.00
	APIC		1,800,000.00
	Retained Earnings		2,000,000.00
	Total Liabilities		7,525,000.00
	Consideration		Amount
	Share issues		40,000.00
	Fair Value		1,200,000.00
	Calculation of Net Assets		Amount
	Cash		60000
	Accounts Recievable		140000
	Inventory		70000
	Land		350000
	Building and Equipment		350000
	Total Assets		970000
Less	Accounts Payable		100000
Less	Notes Payable		225000
	Net Assets		645000
	Calculation of Goodwill		Amount
	Consideration Paid		1200000
	Net Assets Acquired		645000
	Goodwill		555000