The balance sheet of Combinee Company on October 31, Year 5, was as follows: COMBINEE COMPANY Balance Sheet October 31, Year 5 Assets Cash S 60,000 420,000 Other current assets Plant assets (net). 920,000 Total assets $1,400,000 Liabilities & Stockholders' Equity Current liabilities $ 180,000 Long-term debt 250,000 Common stock, $5 par 200,000 Paid-in capital in excess of par 320,000 450,000 Retained earnings Total liabilities & stockholders equity $1,400.000 After a thorougn study. Combinor Corporation's board of directors estab- lished the following current fair values for Combinee's identifiable net assets other than cash: Other current assets $ 500,000 1,000,000 Plant assets (net). Current liabilities Long-term debt 180.000 250,000 Accordingly, on October 31. Year 5. Combinor issued 100.000 shares of its $10 par (current fair value $13) common stock for all the net assets of Combinee in a business combination qualifying for purchase accounting. Also on October 31. Year 5. Combinor paid the following out-of-pocket costs in connection with the combination: Finder's fee and legal fees $180.000 120.000 Costs associated with SEC registration statement - Total out-of-pocket costs of business combination $300.000 Instructions Prepare journal entries in the accounting records of Combinor Corporation on October 31. Year 5. to record the business combination with Combinee Company. Disregard income taxes.
The balance sheet of Combinee Company on October 31, Year 5, was as follows: COMBINEE COMPANY Balance Sheet October 31, Year 5 Assets Cash S 60,000 420,000 Other current assets Plant assets (net). 920,000 Total assets $1,400,000 Liabilities & Stockholders' Equity Current liabilities $ 180,000 Long-term debt 250,000 Common stock, $5 par 200,000 Paid-in capital in excess of par 320,000 450,000 Retained earnings Total liabilities & stockholders equity $1,400.000 After a thorougn study. Combinor Corporation's board of directors estab- lished the following current fair values for Combinee's identifiable net assets other than cash: Other current assets $ 500,000 1,000,000 Plant assets (net). Current liabilities Long-term debt 180.000 250,000 Accordingly, on October 31. Year 5. Combinor issued 100.000 shares of its $10 par (current fair value $13) common stock for all the net assets of Combinee in a business combination qualifying for purchase accounting. Also on October 31. Year 5. Combinor paid the following out-of-pocket costs in connection with the combination: Finder's fee and legal fees $180.000 120.000 Costs associated with SEC registration statement - Total out-of-pocket costs of business combination $300.000 Instructions Prepare journal entries in the accounting records of Combinor Corporation on October 31. Year 5. to record the business combination with Combinee Company. Disregard income taxes.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:The balance sheet of Combinee Company on October 31. Year 5, was as follows:
COMBINEE COMPANY
Balance Sheet
October 31, Year 5
Assets
Cash
S
60,000
420,000
Other current assets
Plant assets (net).
920,000
Total assets.
$1,400,000
Liabilities & Stockholders' Equity
Current liabilities.
$ 180,000
Long-term debt
250,000
Common stock, S5 par
200,000
Paid-in capital in excess of par
320,000
Retained earnings
450,000
.......
Total liabilities & stockholders equity
$1.400.000
After a thorougn study. Combinor Corporation's board of directors estab-
lished the following current fair values for Combinee's identifiable net assets
other than cash:
Other current assets
$ 500,000
1,000,000
Plant assets (net)
Current liabilities
Long-term debt
180.000
250,000
Accordingly, on October 31. Year 5. Combinar issued 100.000 shares of its
$10 par (current fair value $13) common stock for all the net assets of Combinee
in a business combination qualifying for purchase accounting. Also on October
31. Year 5. Combinor paid the following out-of-pocket costs in connection with
the combination:
Finder's fee and legal fees
$180,000
120.000
Costs associated with SEC registration statement
- Total out-of-pocket costs of business combination
$300.000
Instructions Prepare journal entries in the accounting records of Combinor
Corporation on October 31. Year 5. to record the business combination with
Combinee Company. Disregard income taxes.
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