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On January 1, 2024, Whispering Winds Company acquired all the assets and assumed all the liabilities of Carla Vista Company and merged Carla Vista into Whispering Winds. In exchange for the net assets of Carla Vista, Whispering Winds gave its bonds payable with a maturity value of $560,000, a stated interest rate of 10%, interest payable semiannually on June 30 and December 31, a maturity date of January 1, 2034, and a yield rate of 12%. Balance sheets for Whispering Winds and Carla Vista (as well as fair value data) on January 1, 2024, were as follows: Cash Receivables Inventories Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total assets Whispering Winds Book Value $253,430 370,350 798,320 644,730 932,090 (321,220) 240,040 (76,870) $2,840,870 Carla Vista Book Value $123,170 156,940 243,220 104,200 435,090 (162,040) 133,250 (90,840) $942,990 Fair Value $123,170 143,290 317,970 300,670 99,320 35,590 $1,020,010

On January 1, 2024, Whispering Winds Company acquired all the assets and assumed all the liabilities of Carla Vista Company and merged Carla Vista into Whispering Winds. In exchange for the net assets of Carla Vista, Whispering Winds gave its bonds payable with a maturity value of $560,000, a stated interest rate of 10%, interest payable semiannually on June 30 and December 31, a maturity date of January 1, 2034, and a yield rate of 12%. Balance sheets for Whispering Winds and Carla Vista (as well as fair value data) on January 1, 2024, were as follows: Cash Receivables Inventories Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total assets Whispering Winds Book Value $253,430 370,350 798,320 644,730 932,090 (321,220) 240,040 (76,870) $2,840,870 Carla Vista Book Value $123,170 156,940 243,220 104,200 435,090 (162,040) 133,250 (90,840) $942,990 Fair Value $123,170 143,290 317,970 300,670 99,320 35,590 $1,020,010

FINANCIAL ACCOUNTING
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, 2024, Whispering Winds Company acquired all the assets and assumed all the liabilities of Carla Vista Company and merged Carla Vista into Whispering Winds. In exchange for the net assets of Carla Vista, Whispering Winds gave its bonds payable with a maturity value of $560,000, a stated interest rate of 10%, interest payable semiannually on June 30 and December 31, a maturity date of January 1, 2034, and a yield rate of 12%. Balance sheets for Whispering Winds and Carla Vista (as well as fair value data) on January 1, 2024, were as follows: Cash Receivables Inventories Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total assets Current liabilities Bonds payable, 8% due 1/1/2034, Interest payable 6/30 and 12/31 Common stock, $15 par value Common stock, $5 par value Other contributed capital Whispering Winds Book Value $253,430 370,350 798,320 644,730 932,090 (321,220) 240,040 (76,870) $2,840,870 $271,420 1,150,240 1,011,590 Carla Vista Book Value $123,170 156,940 243,220 104,200 435,090 (162,040) 133,250 (90,840) $942,990 $92,830 303,500 238,550 182,010 Fair Value $123,170 143,290 317,970 300,670 99,320 35,590 $1,020,010 $92,830 262,000
Transcribed Image Text:On January 1, 2024, Whispering Winds Company acquired all the assets and assumed all the liabilities of Carla Vista Company and merged Carla Vista into Whispering Winds. In exchange for the net assets of Carla Vista, Whispering Winds gave its bonds payable with a maturity value of $560,000, a stated interest rate of 10%, interest payable semiannually on June 30 and December 31, a maturity date of January 1, 2034, and a yield rate of 12%. Balance sheets for Whispering Winds and Carla Vista (as well as fair value data) on January 1, 2024, were as follows: Cash Receivables Inventories Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total assets Current liabilities Bonds payable, 8% due 1/1/2034, Interest payable 6/30 and 12/31 Common stock, $15 par value Common stock, $5 par value Other contributed capital Whispering Winds Book Value $253,430 370,350 798,320 644,730 932,090 (321,220) 240,040 (76,870) $2,840,870 $271,420 1,150,240 1,011,590 Carla Vista Book Value $123,170 156,940 243,220 104,200 435,090 (162,040) 133,250 (90,840) $942,990 $92,830 303,500 238,550 182,010 Fair Value $123,170 143,290 317,970 300,670 99,320 35,590 $1,020,010 $92,830 262,000
Other contributed capital Retained earnings Total equities 1,011,590 Account Titles and Explanation 407,620 $2,840,870 182,010 Prepare the journal entry on the books of Whispering Winds Company to record the acquisition of Carla Vista Company's assets and liabilities in exchange for the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Debit 126,100 $942,990 Credit
Transcribed Image Text:Other contributed capital Retained earnings Total equities 1,011,590 Account Titles and Explanation 407,620 $2,840,870 182,010 Prepare the journal entry on the books of Whispering Winds Company to record the acquisition of Carla Vista Company's assets and liabilities in exchange for the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Debit 126,100 $942,990 Credit
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