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On January 1, NewTune Company exchanges 18,100 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of New Tune's shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go's fair value. NewTune also paid $33,500 in stock registration and issuance costs in connection with the merger. Several of On-the-Go's accounts' fair values differ from their book values on this date: Receivables Trademarks Record music catalog In-process research and development Notes payable Book Values $ 68,750 113,250 68,750 0 (72,250) Fair Values $ 66,000 282,000 227,000 271,500 (65,700) Precombination book values for the two companies are as follows: Cash Receivables Trademarks Record music catalog Equipment (net) Totals NewTune 70,750 30,250 486,000 853,000 413,000 $ 1,853,000 $ (177,000) (379,000) (400,000) (30,000) (867,000) $(1,853,000) On-the-Go $ 40,500 68,750 113,250 68,750 110,000 $ 401,250 $ (56,000) (72,250) (50,000) (30,000) (193,000) $(113,250) Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Totals a. Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of NewTune. On- the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for NewTune as of the acquisition date. b. Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date. Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of New Tune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for NewTune as of the acquisition date. NEWTUNE COMPANY AND ON-THE-GO, INC. Post-Combination Balance Sheet January 1, 2018 Assets Liabilities and Stockholders' Equity Cash Accounts payable $ 233,000 Receivables (35,750) Notes payable 444,700 Trademarks 768,000 Common stock Record music catalog 1,080,000 Additional paid-in capital Research and development asset 271,500 Retained earnings 867,000 Equipment 523,000 Goodwill 29,700 Total assets $ 2,636.450 Total liabilities and equities $ 1,544,700 Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Show lessA Consolidated Totals 158,250 NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 2018 Consolidation Entries Accounts Newtune Co On-the-Go, Debit Inc. Credit Cash $ 40,500 Receivables 30,250 68.750 Investment in On-the-Go 905,000 Trademarks 486,000 113,250 168,750 Record music catalog 853,000 68,750 Research and development asset 200,000 Equipment 413,000 110,000 Goodwill 29,700 Total assets $ 2,687,250 $ 401,250 Accounts payable $ 177,000 $ 56,000 Notes payable 379,000 72,250 6,550 Common stock 50,000 50,000 Additional paid-in capital 30,000 Retained earnings 867,000 193,000 193,000 Total liabilities and equities $ 1,423,000 $ 371,250 $ 836,250 $ 768,000 1,080,000 200,000 523,000 29,700 $ 2,600,700 $ 233,000 444,700 0 867,000 $ 1,544,700 On January 1, NewTune Company exchanges 18,100 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of New Tune's shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go's fair value. NewTune also paid $33,500 in stock registration and issuance costs in connection with the merger. Several of On-the-Go's accounts' fair values differ from their book values on this date: Receivables Trademarks Record music catalog In-process research and development Notes payable Book Values $ 68,750 113,250 68,750 0 (72,250) Fair Values $ 66,000 282,000 227,000 271,500 (65,700) Precombination book values for the two companies are as follows: Cash Receivables Trademarks Record music catalog Equipment (net) Totals NewTune 70,750 30,250 486,000 853,000 413,000 $ 1,853,000 $ (177,000) (379,000) (400,000) (30,000) (867,000) $(1,853,000) On-the-Go $ 40,500 68,750 113,250 68,750 110,000 $ 401,250 $ (56,000) (72,250) (50,000) (30,000) (193,000) $(113,250) Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Totals a. Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of NewTune. On- the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for NewTune as of the acquisition date. b. Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date. Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of New Tune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for NewTune as of the acquisition date. NEWTUNE COMPANY AND ON-THE-GO, INC. Post-Combination Balance Sheet January 1, 2018 Assets Liabilities and Stockholders' Equity Cash Accounts payable $ 233,000 Receivables (35,750) Notes payable 444,700 Trademarks 768,000 Common stock Record music catalog 1,080,000 Additional paid-in capital Research and development asset 271,500 Retained earnings 867,000 Equipment 523,000 Goodwill 29,700 Total assets $ 2,636.450 Total liabilities and equities $ 1,544,700 Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Show lessA Consolidated Totals 158,250 NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 2018 Consolidation Entries Accounts Newtune Co On-the-Go, Debit Inc. Credit Cash $ 40,500 Receivables 30,250 68.750 Investment in On-the-Go 905,000 Trademarks 486,000 113,250 168,750 Record music catalog 853,000 68,750 Research and development asset 200,000 Equipment 413,000 110,000 Goodwill 29,700 Total assets $ 2,687,250 $ 401,250 Accounts payable $ 177,000 $ 56,000 Notes payable 379,000 72,250 6,550 Common stock 50,000 50,000 Additional paid-in capital 30,000 Retained earnings 867,000 193,000 193,000 Total liabilities and equities $ 1,423,000 $ 371,250 $ 836,250 $ 768,000 1,080,000 200,000 523,000 29,700 $ 2,600,700 $ 233,000 444,700 0 867,000 $ 1,544,700