The following book and fair values were available for Westmont Company as of March 1. Book ValueFair ValueInventory$439,750 $401,250 Land 776,250 1,019,250 Buildings 2,025,000 2,346,750 Customer relationships 0 873,750 Accounts payable (114,500) (114,500)Common stock (2,000,000) Additional paid-in capital (500,000) Retained earnings, 1/1 (445,000) Revenues (506,500) Expenses 325,000 Arturo pays cash of $4,403,500 to acquire Westmont. No stock is issued and Arturo pays $50,600 for legal fees to complete the transaction. Prepare Arturo’s journal entries to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)Record the acquisition of Westmont Company.Record the legal fees related to the combination.

The financial transactions are recorded in the form of journal entry.

Answered: The following book and fair values were…

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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The following book and fair values were available for Westmont Company as of March 1.

	Book Value	Fair Value
Inventory	$	439,750		$	401,250
Land		776,250			1,019,250
Buildings		2,025,000			2,346,750
Customer relationships		0			873,750
Accounts payable		(114,500	)		(114,500	)
Common stock		(2,000,000	)
Additional paid-in capital		(500,000	)
Retained earnings, 1/1		(445,000	)
Revenues		(506,500	)
Expenses		325,000

Arturo pays cash of $4,403,500 to acquire Westmont. No stock is issued and Arturo pays $50,600 for legal fees to complete the transaction.

Prepare Arturo’s journal entries to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record the acquisition of Westmont Company.

Record the legal fees related to the combination.

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