At December 31, 2020, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the outstanding shares of the Sophie Company. In addition, Pandora paid $10,000 in stock issue costs, $40,000 in legal fees. Summarized balance sheet and fair value information for Sophie immediately prior to the acquisition follows. | Book Value $100,000 280,000 520,000 750,000 Fair Value $100,000 250,000 640,000 870,000 500,000 Cash Accounts Receivable Inventory Buildings and Equipment (net) Trademarks and Tradenames $1.650,000 $200,000 Total Assets Accounts Payable Notes Payable Retained Earnings Total Liabilities and Equity $190,000 900,000 900,000 550,000 $1,650,000 Required: Prepare Pandora's general journal entry for the acquisition of Sophie assuming that Pandora's stock was trading at $30 at the date of acquisition and Sophie dissolves as a separate legal entity.

At December 31, 2020, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the outstanding shares of the Sophie Company. In addition, Pandora paid $10,000 in stock issue costs, $40,000 in legal fees. Summarized balance sheet and fair value information for Sophie immediately prior to the acquisition follows. | Book Value $100,000 280,000 520,000 750,000 Fair Value $100,000 250,000 640,000 870,000 500,000 Cash Accounts Receivable Inventory Buildings and Equipment (net) Trademarks and Tradenames $1.650,000 $200,000 Total Assets Accounts Payable Notes Payable Retained Earnings Total Liabilities and Equity $190,000 900,000 900,000 550,000 $1,650,000 Required: Prepare Pandora's general journal entry for the acquisition of Sophie assuming that Pandora's stock was trading at $30 at the date of acquisition and Sophie dissolves as a separate legal entity.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

At December 31, 2020, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the
outstanding shares of the Sophie Company. In addition, Pandora paid $10,000 in stock issue costs, $40,000 in
legal fees.
Summarized balance sheet and fair value information for Sophie immediately prior to the acquisition follows.
Book Value
$100,000
280,000
520,000
750,000
Fair Value
$100,000
250,000
640,000
870,000
500,000
Cash
Accounts Receivable
Inventory
Buildings and Equipment (net)
Trademarks and Tradenames
Total Assets
Accounts Payable
Notes Payable
Retained Earnings
Total Liabilities and Equity
$1650,000
$200,000
900,000
550,000
$1650,000
$190,000
900,000
Required:
Prepare Pandora's general journal entry for the acquisition of Sophie assuming that Pandora's stock was trading
at $30 at the date of acquisition and Sophie dissolves as a separate legal entity.

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