Peal Corporation issued 4,000 shares of its $10 par value stock with a market value of $85,000 to acquire 85 percent of the common stock of Seed Company on August 31, 20X3. Seed's fair value was determined to be $100,000 on that date. Peal had previously purchased 15 percent of Seed's common stock for $9,000 on January 31, 20X1, and had carried this investment at fair value on its balance. Peal reported this investment at $15,000 on its balance sheet at August 31, 20X3, Immediately prior to acquiring the remaining 85 percent of Seed's shares. On August 31, 20X3, Peal also paid appraisal fees of $3,500 and stock issue costs of $2,000 incurred in completing the acquisition of the additional shares. Required: Prepare the journal entries to be recorded by Peal in completing the acquisition of the additional shares of Seed. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Peal Corporation issued 4,000 shares of its $10 par value stock with a market value of $85,000 to acquire 85 percent of the common stock of Seed Company on August 31, 20X3. Seed's fair value was determined to be $100,000 on that date. Peal had previously purchased 15 percent of Seed's common stock for $9,000 on January 31, 20X1, and had carried this investment at fair value on its balance. Peal reported this investment at $15,000 on its balance sheet at August 31, 20X3, Immediately prior to acquiring the remaining 85 percent of Seed's shares. On August 31, 20X3, Peal also paid appraisal fees of $3,500 and stock issue costs of $2,000 incurred in completing the acquisition of the additional shares. Required: Prepare the journal entries to be recorded by Peal in completing the acquisition of the additional shares of Seed. Note: 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:Peal Corporation issued 4,000 shares of its $10 par value stock with a market value of $85,000 to acquire 85 percent of the common
stock of Seed Company on August 31, 20X3. Seed's fair value was determined to be $100,000 on that date. Peal had previously
purchased 15 percent of Seed's common stock for $9,000 on January 31, 20X1, and had carried this investment at fair value on its
balance. Peal reported this investment at $15,000 on its balance sheet at August 31, 20X3, immediately prior to acquiring the
remaining 85 percent of Seed's shares. On August 31, 20X3, Peal also paid appraisal fees of $3,500 and stock issue costs of $2,000
incurred in completing the acquisition of the additional shares.
Required:
Prepare the journal entries to be recorded by Peal in completing the acquisition of the additional shares of Seed.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
No
A
B
с
Event
1
2
3
Answer is not complete.
General Journal
Investment in Seed Company stock
Common stock
Additional paid-in capital
Acquisition Expense
Additional paid-in capital
Cash
Investment in Seed Company stock
Gain on increase in value of Seed Company stock
XXX
***
X
X
››
Debit
85,000
3,500 x
2,000
6,000
Credit
40,000 X
45,000 x
5,500
6,000
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