On January 1, 2018, Peach Company issued 1,500 of its $20 par value common shares with a fair value of $60 per share in exchange for the 2,000 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,700, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows:

Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.

Required:

A. Prepare the journal entry on Peach Company?s books to record the exchange of stock.

B. Prepare a Computation and Allocation Schedule for the difference between book value and value implied by the purchase price.

C. Prepare a consolidated balance sheet at the date of acquisition.

Transcribed Image Text:

Swartz Company Peach Company Cash $ 73,000 $ 13,000 19,000 Accounts receivable (net) 95,000 Inventory Plant and equipment (net) 58,000 25,000 95,000 43,000 Land 26,000 22,000 Total assets $347,000 $122,000 Peach Company Swartz Company Accounts payable Notes payable Common stock, $20 par value Other contributed capital Retained earnings Total equities $ 18,000 21,000 $ 66,000 82,000 100,000 40,000 60,000 24,000 39,000 19,000 $347,000 $122,000