On July 1, 2020, Flounder Corporation purchased Young Company by paying $261,000 cash and issuing a $143,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.Cash $50,000 Accounts payable $208,000Accounts receivable 91,000 Stockholders’ equity 238,700Inventory 108,000 $446,700Land 41,100 Buildings (net) 74,800 Equipment (net) 70,500 Trademarks 11,300 $446,700 The recorded amounts all approximate current values except for land (fair value of $62,600), inventory (fair value of $125,800), and trademarks (fair value of $17,600).1). Prepare the July 1 entry for Flounder Corporation to record the purchase. 2). Prepare the December 31 entry for Flounder Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,640. (

Amortization expense = (Fair Value of Trademarks - Residual Value) / 4 * (6/12) Amortization expense…

Answered: On July 1, 2020, Flounder Corporation…

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 July 1, 2020, Flounder Corporation purchased Young Company by paying $261,000 cash and issuing a $143,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.

Cash	$50,000	Accounts payable	$208,000
Accounts receivable	91,000	Stockholders’ equity	238,700
Inventory	108,000		$446,700
Land	41,100
Buildings (net)	74,800
Equipment (net)	70,500
Trademarks	11,300
	$446,700

The recorded amounts all approximate current values except for land (fair value of $62,600), inventory (fair value of $125,800), and trademarks (fair value of $17,600).

1). Prepare the July 1 entry for Flounder Corporation to record the purchase.

2). Prepare the December 31 entry for Flounder Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,640. (

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