Patel Company issued 107,600 shares of $1 par value common stock (market value of $6/share) for the net assets of Seely Company on January 1, 2014, in a statutory merger. Seely Company had the following assets, liabilities, and owners’ equity at that time:Book Value Tax Basis Fair Value DifferenceCash $18,080 $18,080 $—0—Accounts receivable 107,430 107,430 —0—Inventory (LIFO) 84,850 134,420 49,570Land 28,650 53,340 24,690Plant assets (net) 410,660 476,330 65,670Total assets $649,670 $789,600 Allowance for uncollectible accounts $9,540 $9,540 $—0—Accounts payable 54,020 54,020 —0—Bonds payable 180,300 160,970 (19,330)Common stock, $1 par value 87,340 Other contributed capital 141,000 Retained earnings 177,470 Total equities $649,670 Prepare the journal entry to record the assets acquired and liabilities assumed. Assume an income tax rate of 40%. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)Account Titles and ExplanationDebitCredit

Journal of Patel Company as of January 01, 2014 Particulars Debit Credit Cash $18,080…

Answered: Patel Company issued 107,600 shares of…

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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Patel Company issued 107,600 shares of $1 par value common stock (market value of $6/share) for the net assets of Seely Company on January 1, 2014, in a statutory merger. Seely Company had the following assets, liabilities, and owners’ equity at that time:

*Book Value*
	Tax Basis	Fair Value	Difference
Cash	$18,080	$18,080	$—0—
Accounts receivable	107,430	107,430	—0—
Inventory (LIFO)	84,850	134,420	49,570
Land	28,650	53,340	24,690
Plant assets (net)	410,660	476,330	65,670
Total assets	$649,670	$789,600

Allowance for uncollectible accounts	$9,540	$9,540	$—0—
Accounts payable	54,020	54,020	—0—
Bonds payable	180,300	160,970	(19,330)
Common stock, $1 par value	87,340
Other contributed capital	141,000
Retained earnings	177,470
Total equities	$649,670

Prepare the journal entry to record the assets acquired and liabilities assumed. Assume an income tax rate of 40%. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

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