On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Peach Company Swartz Company Cash $71,250 $13,190 Accounts receivable (net) 99,260 20,070 Inventory 63,300 26,980 Plant and equipment (net) 99,340 39,970 Land 27,990 21,440 Total assets $361,140 $121,650 Accounts payable $64,130 $16,800 Notes payable 85,460 20,800 Common stock, $20 par value 108,400 36,400 Other contributed capital 58,280 23,800 Retained earnings 44,870 23,850 Total equities $361,140 $121,650 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill. (a) Prepare the journal entries on Peach Company’s books to record the exchange of stock. (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 (To record exchange of stock) (To record registration costs)

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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On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows:

	*Peach Company*	*Swartz Company*
Cash	$71,250	$13,190
Accounts receivable (net)	99,260	20,070
Inventory	63,300	26,980
Plant and equipment (net)	99,340	39,970
Land	27,990	21,440
Total assets	$361,140	$121,650

Accounts payable	$64,130	$16,800
Notes payable	85,460	20,800
Common stock, $20 par value	108,400	36,400
Other contributed capital	58,280	23,800
Retained earnings	44,870	23,850
Total equities	$361,140	$121,650

Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.

(a)

Prepare the journal entries on Peach Company’s books to record the exchange of stock. (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



(To record exchange of stock)


(To record registration costs)

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