Advanced accounting

On December 31, 2018. Palm Corporation issued 10,000 shares of its $10 par commons ste ar commons stock (current fair value $50 a share) to stockholders of Starr Company for all the outstanding $5 common stock of Starr There was no contingent consideration. Out of pocket costs of the business combination paid by Palm on December 31, 2018, consisted of: finder's and legal fepe $50,000; and costs associated with the SEC registration statement for Palm common stock $30,000. Both companies use the same accounting principles and procedures. The effective income tax rate for each company was 40%, but you may ignore income tax effects Financial statements of Palm Corporation and Starr Company for the year ended December 31 2018, prior to the consummation of the business combination, follow: Palm Corporation and Starr Company Separate Financial Statements (Prior to business combination) For Year Ended December 31, 2018 Palm Corp. Starr Co. Balance Sheets Assets Cash Inventories Other Current Assets Receivable from Starr Co. Plant Assets - Net Patent (Net) Total Assets 120,000 140,000 100,000 30.000 500,000 35,000 120,000 85,000 250,000 25,000 515,000 890,000 30,000 10,000 95,000 Liabilities and Stockholders' Equity Payable to Palm Corporation Income Taxes Payable 25,000 Other Liabilities 367,000 Common Stock, $10 par 300,000 Common Stock, $5 par Additional Paid in Capital 50,000 Retained Earnings 148,000 Total Liabilities and Stockholders' Equity 890,000 200,000 60,000 120,000 515,000 Statements of Income and Retained Earnings For the Year Ended December 31, 2018 550.000 Net Sales Interest Revenue Total Revenue Cost of Goods Sold Gross Margin 1,000,000 10,000 1,010,000 625,000 385,000 550.000 390,000 160,000 Operating Expenses Interest Expense Income Tax Expense Total Expenses 160,000 45,000 72,000 277.000 75,000 35,000 20,000 130.000 Net Income 108,000 30,000 Beginning Retained Earnings Less: Dividends 65,000 (25.000) 100,000 (10,000) Ending Retained Earnings 148.000 120.000 The December 31, 2018, current fair values of Starr Company's identifiable assets and liabilities were the same as their carrying amounts, except for the assets listed below: Fair Book Value Valus Difference Note: Difference in Plant Assets 12/31/2018 12/31/2018 Attributable to Inventories 130,000 120,000 10,000 Land 20,000 Plant Assets (net) 320,000 250,000 70,000 Building (15 yr. life) 30,000 Patent (net)(5 yr.life) 35,000 25,000 10,000 Machinery (10 Yr.life) 20,000 485,000 395,000 90,000 REQUIRED: (1) Prepare the required journal entries to record the business combination at December 31, 2018 (2) Prepare the December 31, 2018 required elimination entry or entries and post to a "Consolidated Balance Sheet Worksheet" that you create. (3) Prepare a Consolidated Balance Sheet at December 31, 2018 in good form. On December 31, 2018. Palm Corporation issued 10,000 shares of its $10 par commons ste ar commons stock (current fair value $50 a share) to stockholders of Starr Company for all the outstanding $5 common stock of Starr There was no contingent consideration. Out of pocket costs of the business combination paid by Palm on December 31, 2018, consisted of: finder's and legal fepe $50,000; and costs associated with the SEC registration statement for Palm common stock $30,000. Both companies use the same accounting principles and procedures. The effective income tax rate for each company was 40%, but you may ignore income tax effects Financial statements of Palm Corporation and Starr Company for the year ended December 31 2018, prior to the consummation of the business combination, follow: Palm Corporation and Starr Company Separate Financial Statements (Prior to business combination) For Year Ended December 31, 2018 Palm Corp. Starr Co. Balance Sheets Assets Cash Inventories Other Current Assets Receivable from Starr Co. Plant Assets - Net Patent (Net) Total Assets 120,000 140,000 100,000 30.000 500,000 35,000 120,000 85,000 250,000 25,000 515,000 890,000 30,000 10,000 95,000 Liabilities and Stockholders' Equity Payable to Palm Corporation Income Taxes Payable 25,000 Other Liabilities 367,000 Common Stock, $10 par 300,000 Common Stock, $5 par Additional Paid in Capital 50,000 Retained Earnings 148,000 Total Liabilities and Stockholders' Equity 890,000 200,000 60,000 120,000 515,000 Statements of Income and Retained Earnings For the Year Ended December 31, 2018 550.000 Net Sales Interest Revenue Total Revenue Cost of Goods Sold Gross Margin 1,000,000 10,000 1,010,000 625,000 385,000 550.000 390,000 160,000 Operating Expenses Interest Expense Income Tax Expense Total Expenses 160,000 45,000 72,000 277.000 75,000 35,000 20,000 130.000 Net Income 108,000 30,000 Beginning Retained Earnings Less: Dividends 65,000 (25.000) 100,000 (10,000) Ending Retained Earnings 148.000 120.000 The December 31, 2018, current fair values of Starr Company's identifiable assets and liabilities were the same as their carrying amounts, except for the assets listed below: Fair Book Value Valus Difference Note: Difference in Plant Assets 12/31/2018 12/31/2018 Attributable to Inventories 130,000 120,000 10,000 Land 20,000 Plant Assets (net) 320,000 250,000 70,000 Building (15 yr. life) 30,000 Patent (net)(5 yr.life) 35,000 25,000 10,000 Machinery (10 Yr.life) 20,000 485,000 395,000 90,000 REQUIRED: (1) Prepare the required journal entries to record the business combination at December 31, 2018 (2) Prepare the December 31, 2018 required elimination entry or entries and post to a "Consolidated Balance Sheet Worksheet" that you create. (3) Prepare a Consolidated Balance Sheet at December 31, 2018 in good form