Effective December 31, 2013, Zintel Corporation proposes to issue additional shares of its common stock in exchange for all the assets and liabilities of Smith Corporation and Platz Corporation, after which Smith and Platz will distribute the Zintel stock to their stockholders in complete liquidation and dissolution. Balance sheets of each of the corporations immediately prior to merger on December 31, 2013, follow. The common stock exchange ratio was negotiated to be 1:1 for both Smith and Platz. Zintel Smith Platz Current assets $1,639,700 $365,900 $10,830 Long-term assets (net) 6,057,700 1,998,030 106,310 Total $7,697,400 $2,363,930 $117,140 Current liabilities $758,400 $106,890 $8,230 Long-term debt 1,024,100 466,260 64,390 Common stock, $5 par value 2,345,600 693,400 20,680 Retained earnings 3,569,300 1,097,380 23,840 Total $7,697,400 $2,363,930 $117,140 Prepare journal entries on Zintel’s books to record the combination. Assume the following: The identifiable assets and liabilities of Smith and Platz are all reflected in the balance sheets (above), and their recorded amounts are equal to their current fair values except for long-term assets. The fair value of Smith’s long-term assets exceed their book value by $18,150, and the fair value of Platz’s long-term assets exceed their book values by $5,140. Zintel’s common stock is traded actively and has a current market price of $16 per share. Prepare journal entry on Zintel’s books to record the combination. (AICPA adapted) (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings

Effective December 31, 2013, Zintel Corporation proposes to issue additional shares of its common stock in exchange for all the assets and liabilities of Smith Corporation and Platz Corporation, after which Smith and Platz will distribute the Zintel stock to their stockholders in complete liquidation and dissolution. Balance sheets of each of the corporations immediately prior to merger on December 31, 2013, follow. The common stock exchange ratio was negotiated to be 1:1 for both Smith and Platz. Zintel Smith Platz Current assets $1,639,700 $365,900 $10,830 Long-term assets (net) 6,057,700 1,998,030 106,310 Total $7,697,400 $2,363,930 $117,140 Current liabilities $758,400 $106,890 $8,230 Long-term debt 1,024,100 466,260 64,390 Common stock, $5 par value 2,345,600 693,400 20,680 Retained earnings 3,569,300 1,097,380 23,840 Total $7,697,400 $2,363,930 $117,140 Prepare journal entries on Zintel’s books to record the combination. Assume the following: The identifiable assets and liabilities of Smith and Platz are all reflected in the balance sheets (above), and their recorded amounts are equal to their current fair values except for long-term assets. The fair value of Smith’s long-term assets exceed their book value by $18,150, and the fair value of Platz’s long-term assets exceed their book values by $5,140. Zintel’s common stock is traded actively and has a current market price of $16 per share. Prepare journal entry on Zintel’s books to record the combination. (AICPA adapted) (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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	Zintel	Smith	Platz
Current assets	$1,639,700	$365,900	$10,830
Long-term assets (net)	6,057,700	1,998,030	106,310
Total	$7,697,400	$2,363,930	$117,140

Current liabilities	$758,400	$106,890	$8,230
Long-term debt	1,024,100	466,260	64,390
Common stock, $5 par value	2,345,600	693,400	20,680
Retained earnings	3,569,300	1,097,380	23,840
Total	$7,697,400	$2,363,930	$117,140

Prepare journal entries on Zintel’s books to record the combination. Assume the following:

The identifiable assets and liabilities of Smith and Platz are all reflected in the balance sheets (above), and their recorded amounts are equal to their current fair values except for long-term assets. The fair value of Smith’s long-term assets exceed their book value by $18,150, and the fair value of Platz’s long-term assets exceed their book values by $5,140. Zintel’s common stock is traded actively and has a current market price of $16 per share. Prepare journal entry on Zintel’s books to record the combination. (AICPA adapted) (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings
Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings
Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings
Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings
Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings
Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings
Common Stock Current Assets Goodwill Liabilities Long-term Assets Long-term Debt No Entry Other Contributed Capital Retained Earnings

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