Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. Padre Company Sol Company Book Values Book Values Fair Values 12/31 12/31 12/31 Cash $ 159,000 45,550 $ 45,550 Receivables 277,500 380,000 380,000 Inventory 437,500 289,000 348,200 Land 700,000 213,000 188,500 Building and equipment (net) 752,500 274,000 336,700 Franchise agreements 311,000 273,000 304,800 Accounts payable (352,000 ) (179,000 ) (179,000 ) Accrued expenses (109,000 ) (42,250 ) (42,250 ) Longterm liabilities (932,500 ) (640,000 ) (640,000 ) Common stock—$20 par value (660,000 ) Common stock—$5 par value (210,000 ) Additional paid–in capital (70,000 ) (90,000 ) Retained earnings, 1/1 (455,000 ) (288,000 ) Revenues (1,049,000 ) (359,300 ) Expenses 990,000 334,000 Note: Parentheses indicate a credit balance. On December 31, Padre acquires Sol’s outstanding stock by paying $142,500 in cash and issuing 17,500 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $22,900 as well as $12,500 in stock issuance costs. Determine the value that would be shown in Padre’s consolidated financial statements for each of the accounts listed. (Input all amounts as positive values.)

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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Question

Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts.

	Padre Company	Sol Company
	Book Values	Book Values	Fair Values
	12/31	12/31	12/31
Cash	$	159,000		45,550		$	45,550
Receivables		277,500		380,000			380,000
Inventory		437,500		289,000			348,200
Land		700,000		213,000			188,500
Building and equipment (net)		752,500		274,000			336,700
Franchise agreements		311,000		273,000			304,800
Accounts payable		(352,000	)	(179,000	)		(179,000	)
Accrued expenses		(109,000	)	(42,250	)		(42,250	)
Longterm liabilities		(932,500	)	(640,000	)		(640,000	)
Common stock—$20 par value		(660,000	)
Common stock—$5 par value				(210,000	)
Additional paid–in capital		(70,000	)	(90,000	)
Retained earnings, 1/1		(455,000	)	(288,000	)
Revenues		(1,049,000	)	(359,300	)
Expenses		990,000		334,000

Note: Parentheses indicate a credit balance.

On December 31, Padre acquires Sol’s outstanding stock by paying $142,500 in cash and issuing 17,500 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $22,900 as well as $12,500 in stock issuance costs.

Determine the value that would be shown in Padre’s consolidated financial statements for each of the accounts listed. (Input all amounts as positive values.)