Separate balance sheets of Pellman Corporation and Shire Company on May 31 2061, together with fair values of Shire's identifiable net assets, is as follows: Pellman Corporation and Shire Company Separate Balance Sheets (prior to business combination) May 31, 20X1 Shire company Pellman carrying amount current fair valur Corporation Assets Cash $550,000 $10,000 $10,000 Trade accounts Receivable (net) 700,000 60,000 60,000 Inventories 1,400,000 120,000 140.000 Plant Assets(net) 2,850,000 610.000 690,000 Total Assets $5,500,000 $800,000 Liabilities and Stockholders Equity Current Liabilities $500,000 $80,000 $80,000 Long Term Debt 1,000,000 400,000 440,000 Common Stock $10 par 1.500.000 100,000 Additional Paid in Capital 1,200,000 40,000 Retained Earnings 1,300,000 180,000 Total Liabilities and stockholders Equity $5,500,000 $800,000 On May 31, 20x1, Pellman acquired all 10,000 shares of Shire's outstanding common stock by paying $300,000 cash to Shire's stockholders and $50,000 cash for finders and legal fees related to the business combination. there was no contigent consideration and Shire become a subsidiary of pellman. Instructions: a. Prepare journal entries for Pellman to record the business combination with Shire on May 31, 20x1. (disregsrd income tax) b. Prepare the working paper for the consolidated balance sheet of Pellman Corporation and subsidiary on May 31, 20X1. and the related working paper elimination in journal entry format?
Separate balance sheets of Pellman Corporation and Shire Company on May 31 2061, together with fair values of Shire's identifiable net assets, is as follows:
Pellman Corporation and Shire Company
Separate Balance Sheets (prior to business combination)
May 31, 20X1
Shire company
Pellman carrying amount current fair valur
Corporation
Assets
Cash $550,000 $10,000 $10,000 Trade
Receivable (net) 700,000 60,000 60,000 Inventories 1,400,000 120,000 140.000 Plant Assets(net) 2,850,000 610.000 690,000 Total Assets $5,500,000 $800,000
Liabilities and
Current Liabilities $500,000 $80,000 $80,000 Long Term Debt 1,000,000 400,000 440,000
Common Stock $10 par 1.500.000 100,000
Additional Paid
in Capital 1,200,000 40,000
Total Liabilities and
stockholders Equity $5,500,000 $800,000
On May 31, 20x1, Pellman acquired all 10,000 shares of Shire's outstanding common stock by paying $300,000 cash to Shire's stockholders and $50,000 cash for finders and legal fees related to the business combination. there was no contigent consideration and Shire become a subsidiary of pellman.
Instructions: a. Prepare journal entries for Pellman to record the business combination with Shire on May 31, 20x1. (disregsrd income tax)
b. Prepare the working paper for the consolidated
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