Question

The following book and fair values were available for Westmont Company as of March 1. $ Book Value 245,500 820,500 2,115,000 Inventory Land Buildings Customer relationships Accounts payable Common stock Additional paid-in capital Retained earnings 1/1 Revenues Expenses Fair Value $ 203,750 1,072,500 2,457,750 833,250 (96,000) (96,000) (2,000,000) (500,000) (413,000) (494,000) 322,000 Arturo Company pays $4,160,000 cash and issues 22,200 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont's common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $31,900 and Arturo pays $51,200 for legal fees to complete the transaction. Prepare Arturo's journal entry to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

	Debit	Credit
Inventory	203750
Land	1072500
Buildings	2457750
Customer Relationships	833250
Goodwill	798750
Accounts Payable		96000
Common Stock		44400	=22200*2
Additional Paid-In Capital		1065600	=22200*(50-2)
Cash		4160000
Professional Services Expense	51200
Cash		51200
Additional Paid-In Capital	31900
Cash		31900