The stockholders’ equities of Pal Corporation and Sip Corporation at January 1 were as follows (in thousands):
| Pal | Sip |
Capital stock, $10 par | $6,000 | $3,200 |
Other paid-in capital | 800 | 1,600 |
Retained earnings | 2,400 | 1,200 |
Stockholders’ equity | $9,200 | $6,000 |
On January 2, Pal issued 600,000 of its shares with a market value of $20 per share for all of Sip’s shares, and Sip was dissolved. On the same day, Pal paid $20,000 to register and issue the shares and $40,000 for other direct costs of combination.
REQUIRED: Prepare the stockholders’ equity section of Pal Corporation’s balance sheet immediately after the acquisition on January 2. (Hint: Prepare the journal entry.)
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