On January 1, 2019, Polo Company purchased 100% of the common stock of Save Company by issuing

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On January 1, 2019, Polo Company purchased 100% of the common stock of Save Company by issuing 40,000 shares of its (Polo?s) $10 par value common stock with a market price of $17.50 per share. Polo incurred cash expenses of $20,000 for registering and issuing the common stock. The stockholders? equity section of the two companies? balance sheets on December 31, 2018, were:

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Required:

A. Prepare the journal entry on the books of Polo Company to record the purchase of the common stock of Save Company and related expenses.

B. Prepare the elimination entry required for the preparation of a consolidated balance sheet workpaper on the date of acquisition.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Advanced Accounting

ISBN: 978-1119373209

7th edition

Authors: Debra C. Jeter, Paul K. Chaney

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