Chapter 1, Problem 1.27P

Acquisition in Multiple Steps
Peal Corporation issued 4,000 shares of its $10 par value stock with a market value of $85,000 toacquire 85 percent of the common stock of Seed Company on August 31, 20X3. Seed’s fair valuewas determined to be $100,000 on that date, Peal had earlier purchased 15 percent of Seed’s common stock for $9,000 on January 31, 20X1, and had carried this investment at fair value on itsbalance. Peal reported this investment at $15,000 on its balance sheet at August 31, 20X3, immediately prior to acquiring the remaining 85 percent of Seeds shares. On August 31, 20X3, Peal alsopaid appraisal fees of $3,500 and stock issue costs of $2000 incurred in completing the acquisitionof the additional shares.
Required
Give the journal entries to be recorded by Peal in completing the acquisition of the additionalshares of Seed.