On January 1, 20X2, Prost Company acquired all of SKK Corporation's assets and liabilities by issuing 25,200 shares of its $6 par value common stock. At that date, Prost shares were selling at $23 per share. Historical cost and fair value balance sheet data for SKK at the time of acquisition were as follows: Balance Sheet Item Cash & Receivables Inventory Buildings & Equipment Less: Accumulated Depreciation Total Assets Accounts Payable Notes Payable Common Stock ($10 par value) Retained Earnings Total Liabilities & Equities Historical Cost $ 19,000 100,000 603,000 (227,000) $ 495,000 $ 60,000 83,000 168,000 184,000 $ 495,000 Fair Value $ 19,000 105,000 465,000 $589,000 $ 60,000 81,000 Prost paid legal fees for the transfer of assets and liabilities of $16,000. Prost also paid audit fees of $22,000 and listing application fees of $13,000, both related to the issuance of new shares. Required: Prepare the journal entries made by Prost to record the business combination. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
On January 1, 20X2, Prost Company acquired all of SKK Corporation's assets and liabilities by issuing 25,200 shares of its $6 par value common stock. At that date, Prost shares were selling at $23 per share. Historical cost and fair value balance sheet data for SKK at the time of acquisition were as follows: Balance Sheet Item Cash & Receivables Inventory Buildings & Equipment Less: Accumulated Depreciation Total Assets Accounts Payable Notes Payable Common Stock ($10 par value) Retained Earnings Total Liabilities & Equities Historical Cost $ 19,000 100,000 603,000 (227,000) $ 495,000 $ 60,000 83,000 168,000 184,000 $ 495,000 Fair Value $ 19,000 105,000 465,000 $589,000 $ 60,000 81,000 Prost paid legal fees for the transfer of assets and liabilities of $16,000. Prost also paid audit fees of $22,000 and listing application fees of $13,000, both related to the issuance of new shares. Required: Prepare the journal entries made by Prost to record the business combination. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 20X2, Prost Company acquired all of SKK Corporation's assets and
liabilities by issuing 25,200 shares of its $6 par value common stock. At that date, Prost
shares were selling at $23 per share. Historical cost and fair value balance sheet data for
SKK at the time of acquisition were as follows:
Balance Sheet Item
Cash & Receivables
Inventory
Buildings & Equipment
Less: Accumulated Depreciation
Total Assets
Accounts Payable
Notes Payable
Common Stock ($10 par value
Retained Earnings
Total Liabilities & Equities
Historical Cost
$ 19,000
100,000
603,000
(227,000)
$ 495,000
$
60,000
83,000
168,000
184,000
$ 495,000
Fair Value
$ 19,000
105,000
465,000
$589,000
$ 60,000
81,000
Prost paid legal fees for the transfer of assets and liabilities of $16,000. Prost also paid
audit fees of $22,000 and listing application fees of $13,000, both related to the issuance
of new shares.
Required:
Prepare the journal entries made by Prost to record the business combination. (If no
entry is required for a transaction/event, select "No journal entry required" in the first
account field.)
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