Question 2. Maplewood Corporation purchased the net assets of West Corporation on January 2, 2016 for $580,000. West's balance sheet on January 1, 2016 was as follows: Accounts receivable-net $ 180,000 Current liabilities $ 70,000 Inventory 360,000 Long term debt 160,000 Land 40,000 Common stock ($1 par) 20,000 60,000 Paid-in capital 430,000 40,000 80,000 Retained earnings $720,000 Total liab. & equity $ 720,000 Building-net Equipment-net Total assets Fair values agree with book values except for inventory, land, and equipment, which have fair values of $400,000, $50,000 and $70,000, respectively. West has patent rights valued at $20,000. Required: A. Prepare Maplewood's general journal entry for the cash purchase of West's net assets. B. Assume Maplewood Corporation purchased the net assets of West Corporation for $500,000 rather than $580,000, prepare the general journal entry.

Question 2. Maplewood Corporation purchased the net assets of West Corporation on January 2, 2016 for $580,000. West's balance sheet on January 1, 2016 was as follows: Accounts receivable-net $ 180,000 Current liabilities $ 70,000 Inventory 360,000 Long term debt 160,000 Land 40,000 Common stock ($1 par) 20,000 60,000 Paid-in capital 430,000 40,000 80,000 Retained earnings $720,000 Total liab. & equity $ 720,000 Building-net Equipment-net Total assets Fair values agree with book values except for inventory, land, and equipment, which have fair values of $400,000, $50,000 and $70,000, respectively. West has patent rights valued at $20,000. Required: A. Prepare Maplewood's general journal entry for the cash purchase of West's net assets. B. Assume Maplewood Corporation purchased the net assets of West Corporation for $500,000 rather than $580,000, prepare the general journal entry.

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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