Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Company’s balance sheet was as follows: Book Value Fair Value Cash $129,480 $129,480 Receivables (net) 177,290 209,150 Inventory 362,130 412,850 Plant and equipment (net) 485,520 490,050 Land 440,090 647,770 Total assets $1,594,510 $1,889,300 Current Liabilities $586,310 $568,060 Common stock ($5 par value) 486,050 Other contributed capital 122,210 Retained earnings 399,940 Total equities $1,594,510 (a) Prepare the journal entries on the books of Preston Company to record the purchase of the assets and assumption of the liabilities of Saville Company if the amount paid was $1,428,550 in cash. (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 Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Company’s balance sheet was as follows: Book Value Fair Value Cash $129,480 $129,480 Receivables (net) 177,290 209,150 Inventory 362,130 412,850 Plant and equipment (net) 485,520 490,050 Land 440,090 647,770 Total assets $1,594,510 $1,889,300 Current Liabilities $586,310 $568,060 Common stock ($5 par value) 486,050 Other contributed capital 122,210 Retained earnings 399,940 Total equities $1,594,510 (a) Prepare the journal entries on the books of Preston Company to record the purchase of the assets and assumption of the liabilities of Saville Company if the amount paid was $1,428,550 in cash. (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 Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

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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(a)

Prepare the journal entries on the books of Preston Company to record the purchase of the assets and assumption of the liabilities of Saville Company if the amount paid was $1,428,550 in cash. (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
Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings
Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings
Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings
Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings
Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings
Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings
Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

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