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If dissolution doesn't take place and both remain as separate entities, create applicable journal entries and use the working paper elimination method. Show the total
If dissolution doesn't take place and both remain as separate entities, create applicable journal entries and use the working paper elimination method. Show the total amountd of debits and credits.
1. On January 1, NewTune Company exchanges 15,000 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 a value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go's fair value. New Tune also paid $25,000 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 (credit balances in parentheses): Book Values Fair Values . Receivables Trademarks Record music catalog In-process research and development Notes payable $ 63,000 225,000 180,000 200,000 (45,000) . - . $ 65,000 95,000 60,000 -O- (50,000) . * . . . Precombination book values for the two companies are as follows: New Tune Cash Receivables... Trademarks Record music catalog. Equipment (net) Totals $ 60,000 150,000 400,000 840,000 320,000 $ 1.770,000 On-the-Go $ 29,000 65,000 95,000 60,000 105,000 $354,000 (continued) (continued) On-the-Go Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings ... Totals New Tune $ (110,000) (370,000) (400,000) (30,000) (860,000) $(1.770,000) $ (34,000) (50,000) (50,000) (30,000) (190,000) $(354,000)Step by Step Solution
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