On July 1, 2020, Martinez Corporation purchased Young Company by paying $259,000 cash and issuing a $128,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.Cash $50,400 Accounts payable $206,000Accounts receivable 89,500 Stockholders’ equity 238,500Inventory 105,000 $444,500Land 41,500 Buildings (net) 75,300 Equipment (net) 70,900 Trademarks 11,900 $444,500 The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $126,100), and trademarks (fair value of $15,680).Prepare the July 1 entry for Martinez Corporation to record the purchase. Prepare the December 31 entry for Martinez Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,440

Answered: On July 1, 2020, Martinez Corporation…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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On July 1, 2020, Martinez Corporation purchased Young Company by paying $259,000 cash and issuing a $128,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.

Cash	$50,400	Accounts payable	$206,000
Accounts receivable	89,500	Stockholders’ equity	238,500
Inventory	105,000		$444,500
Land	41,500
Buildings (net)	75,300
Equipment (net)	70,900
Trademarks	11,900
	$444,500

The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $126,100), and trademarks (fair value of $15,680).

Prepare the July 1 entry for Martinez Corporation to record the purchase.

Prepare the December 31 entry for Martinez Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,440

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