Question
I need the TWO Problems below completed. I have attached the excel document that was provided by my teacher that MUST be filled out with
I need the TWO Problems below completed. I have attached the excel document that was provided by my teacher that MUST be filled out with the answers. Thank you!
Problem 1-5 (LO 3, 4) Revaluation of assets
Jack Company is a corporation that was organized on July 1, 2015. The June 30, 2020, balance sheet for Jack is as follows:
Assets
Investments $ 400,500
Accounts receivable $1,250,000
Allowance for doubtful accounts (300,000) 950,000
Inventory 1,500,000
Prepaid insurance 18,000
Land 58,000
Machinery and equipment (net) 1,473,500
Goodwill 100,000
Total assets $4,500,000
Liabilities and Equity
Current liabilities $1,475,000
Common stock ($10 par) 1,200,000
Retained earnings 1,825,000
Total liabilities and equity $4,500,000
The experience of other companies over the last several years indicates that the machinery and equipment can be sold at 130% of its book value.
An analysis of the accounts receivable indicates that the realizable value is $925,000. An independent appraisal made in June 2020 values the land at $70,000. Using the lower-of-cost-or-market rule, inventory is to be restated at $1,200,000.
Calway Corporation plans to exchange 18,000 of its shares for the 120,000 Jack shares. During June 2020, the fair value of a share of Calway Corporation is $270. Acquisition costs are $12,000.
The stockholders? equity account balances of Calway Corporation as of June 30, 2015, are as follows: Common stock ($10 par) $2,000,000
Paid-in capital in excess of par 580,000
Retained earnings 2,496,400
Total stockholders? equity $5,076,400
Required Record the acquisition of Jack Company by Calway on July 1, 2020. Use value analysis to support the acquisition entries.
Problem 1-6 (LO 3, 4) Cash purchase with goodwill Tweeden Corporation is contemplating the acquisition of the net assets of Sylvester Corporation in anticipation of expanding its operations. The balance sheet of Sylvester Corporation on December 31, 2015, is as follows:
Sylvester Corporation
Balance Sheet
December 31, 2015
Current assets:
Notes receivable $ 24,000
Accounts receivable 56,000
Inventory 31,000
Other current assets 18,000
Total current assets $129,000
Investments 65,000
Fixed assets:
Land $ 32,000
Building 245,000
Equipment 387,000
Total fixed assets 664,000
Intangibles:
Goodwill $ 45,000
Patents 23,000
Trade names 10,000
Total intangibles 78,000
Total assets $936,000
Current liabilities: Accounts payable $ 45,000
Payroll and benefit-related liabilities 12,500
Debt maturing in one year 10,000
Total current liabilities $ 67,500
Other liabilities:
Long-term debt $248,000
Payroll and benefit-related liabilities 156,000
Total other liabilities 404,000
Stockholders? equity:
Common stock $100,000
Paid-in capital in excess of par 250,000
Retained earnings 114,500
Total equity 464,500
Total liabilities and equity $936,000
An appraiser for Tweeden determined the fair values of Sylvester?s assets and liabilities to be as shown on next page.
Assets
Notes receivable $ 24,000
Accounts receivable 56,000
Inventory 30,000
Other current assets 15,000
Investments 63,000
Land 55,000
Building 275,000
Equipment 426,000
Goodwill ?
Patents 20,000
Trade names 15,000
Liabilities
Accounts payable $ 45,000
Payroll and benefit-related liabilities?current 12,500
Debt maturing in one year 10,000
Long-term debt 248,000
Payroll and benefit-related liabilities?long-term 156,000
The agreed-upon purchase price is $580,000 in cash. Acquisition costs paid in cash total $20,000.
Required
Using the above information, do value analysis and prepare the entry on the books of Tweeden Corporation to acquire the net assets of Sylvester Corporation on December 31, 2015.
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