On March 31, 2015, Pal. Company issued 100,000 shares of its $1 par ordinary shares (current fair value $5 a share) for the net assets of Sanabel Company. Also on that date, Pal. paid the following out-of-pocket costs in connection with the combination: Finder's, accounting, and legal fees relating to business combination Costs associated with SEC registration statement Total out-of-pocket costs of business combination $ 70,000 50,000 $120,000 The balance sheet of Sanabel on March 31, 2015, with related current fair values, was as follows: Balance Sheet (prior to business combination) March 31, 2015 Carrying Assets Current assets Plant assets (net) Other assets (none intangible) Current Amounts Fair Values $200,000 $260,000 400,000 480,000 140,000 150,000 $740,000 Total assets Liabilities and Stockholders' Equity Current liabilities Long-term debt Common stock, no par or stated value $ 80,000 $ 80,000 260,000 260,000 150,000 Retained earnings 250,000 Total liabilities and stockholders' equity $740,000 Required: Prepare journal entries (omit explanations) for Pal. Company on March 31, 2015, to record the business combination with Sanabel Company.
On March 31, 2015, Pal. Company issued 100,000 shares of its $1 par ordinary shares (current fair value $5 a share) for the net assets of Sanabel Company. Also on that date, Pal. paid the following out-of-pocket costs in connection with the combination: Finder's, accounting, and legal fees relating to business combination Costs associated with SEC registration statement Total out-of-pocket costs of business combination $ 70,000 50,000 $120,000 The balance sheet of Sanabel on March 31, 2015, with related current fair values, was as follows: Balance Sheet (prior to business combination) March 31, 2015 Carrying Assets Current assets Plant assets (net) Other assets (none intangible) Current Amounts Fair Values $200,000 $260,000 400,000 480,000 140,000 150,000 $740,000 Total assets Liabilities and Stockholders' Equity Current liabilities Long-term debt Common stock, no par or stated value $ 80,000 $ 80,000 260,000 260,000 150,000 Retained earnings 250,000 Total liabilities and stockholders' equity $740,000 Required: Prepare journal entries (omit explanations) for Pal. Company on March 31, 2015, to record the business combination with Sanabel Company.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please do not give solution in image format and give solution in step by step and give calculations also and give solution in table format......
Transcribed Image Text:On March 31, 2015, Pal. Company issued 100,000 shares of its $1 par ordinary shares (current fair
value $5 a share) for the net assets of Sanabel Company. Also on that date, Pal. paid the following
out-of-pocket costs in connection with the combination:
Finder's, accounting, and legal fees relating to business combination
Costs associated with SEC registration statement
Total out-of-pocket costs of business combination
$ 70,000
50,000
$120,000
The balance sheet of Sanabel on March 31, 2015, with related current fair values, was as
follows:
Balance Sheet (prior to business combination)
March 31, 2015
Carrying
Assets
Current assets
Plant assets (net)
Other assets (none intangible)
Current
Amounts
Fair Values
$200,000
$260,000
400,000
480,000
140,000
150,000
$740,000
Total assets
Liabilities and Stockholders' Equity
Current liabilities
Long-term debt
Common stock, no par or stated value
$ 80,000
$ 80,000
260,000
260,000
150,000
Retained earnings
250,000
Total liabilities and stockholders' equity
$740,000
Required:
Prepare journal entries (omit explanations) for Pal. Company on March 31, 2015, to record the
business combination with Sanabel Company.
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