Q4/ On November 1, 2005, Prox Corporation issued 10,000 shares of its $10 par ($30 current fair value) common stock for 85 of the 100 outstanding shares of Senna Company's $100 par common stock, in a business combination. Out-of-pocket costs of the business combination were as follows: Legal and finder's fees associated with the business combination $ 36,800 Costs incurred for SEC registration statement for Prox Common Stock 20,000 Total out-of-pocket costs of business combination $ 85,000 On November 1, 2005, the current fair values of Senna's identifiable net assets were equal to their carrying amounts. On that date, Senna's stockholders' equity consisted of the following: Common stock, $100 par $ 10,000 Additional paid-in capital 140,000 Retained Earnings 70,000 Total stockholders equity $220,000 Instruction: Prepare journal entries for Prox Corporation on November 1, 2005, to record the business combination with Senna Company. (Disregard income taxes.)

Q4/ On November 1, 2005, Prox Corporation issued 10,000 shares of its $10 par ($30 current fair value) common stock for 85 of the 100 outstanding shares of Senna Company's $100 par common stock, in a business combination. Out-of-pocket costs of the business combination were as follows: Legal and finder's fees associated with the business combination $ 36,800 Costs incurred for SEC registration statement for Prox Common Stock 20,000 Total out-of-pocket costs of business combination $ 85,000 On November 1, 2005, the current fair values of Senna's identifiable net assets were equal to their carrying amounts. On that date, Senna's stockholders' equity consisted of the following: Common stock, $100 par $ 10,000 Additional paid-in capital 140,000 Retained Earnings 70,000 Total stockholders equity $220,000 Instruction: Prepare journal entries for Prox Corporation on November 1, 2005, to record the business combination with Senna Company. (Disregard income taxes.)

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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