E 1-4 Journal entries to record an acquisition Pam Company issued 480,000 shares of $10 par common stock with a fair value of $10,200,000 for all the voting common stock of Sun Company. In addition, Pam incurred the following costs: Legal fees to arrange the business combination $100,000 Cost of SEC registration, including accounting and legal fees 48,000 Cost of printing and issuing net stock certificates 12,000 Indirect costs of combining, including allocated overhead and executive salaries 80,000 Immediately before the acquisition in which Sun Company was dissolved, Sun’s assets and equities were as follows (in thousands): Book Value Fair Value Current assets $ 4,000 $ 4,400 Plant assets 6,000 8,800 Liabilities 1,200 1,200 Common stock 8,000 Retained earnings 800 Required: Prepare all journal entries on Pam’s books to record the acquisition.
E 1-4 Journal entries to record an acquisition
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Pam Company issued 480,000 shares of $10 par common stock with a fair value of $10,200,000 for all the voting common stock of Sun Company. In addition, Pam incurred the following costs:
Legal fees to arrange the business combination
$100,000
Cost of SEC registration, including accounting and legal fees
48,000
Cost of printing and issuing net stock certificates
12,000
Indirect costs of combining, including allocated
overhead and executive salaries80,000
Immediately before the acquisition in which Sun Company was dissolved, Sun’s assets and equities were as follows (in thousands):
Book Value
Fair Value
Current assets
$ 4,000
$ 4,400
Plant assets
6,000
8,800
Liabilities
1,200
1,200
Common stock
8,000
Retained earnings 800
Required:
Prepare all journal entries on Pam’s books to record the acquisition.
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