Question
Marino Company had the following balance sheet on January 1, 2019: Marino Company Balance Sheet January 1, 2019 1 Cash $20,000.00 Accounts payable $20,000.00 2
Marino Company had the following balance sheet on January 1, 2019:
Marino Company |
Balance Sheet |
January 1, 2019 |
1 | Cash | $20,000.00 | Accounts payable | $20,000.00 |
2 | Inventory | 30,000.00 | Notes payable | 100,000.00 |
3 | Property, plant, and equipment | 200,000.00 |
|
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4 | Patent | 30,000.00 | Shareholders equity | 160,000.00 |
5 |
| $280,000.00 |
| $280,000.00 |
On January 1, 2019, Paul Company purchased Marino by acquiring all its outstanding shares for $300,000 cash. On that date, the fair value of the inventory was $20,000, and the fair value of the equipment was $250,000. In addition, the fair value of a previously unrecorded customer list was $25,000. For all other amounts, the book value of January 1, 2019, equaled fair value.
Required:
1. | Compute the goodwill associated with the purchase of Marino. |
2. | Prepare the journal entry necessary on January 1, 2019, to record the acquisition of Marino. |
CHART OF ACCOUNTSMarino CompanyGeneral Ledger
ASSETS | |
111 | Cash |
121 | Accounts Receivable |
141 | Inventory |
152 | Prepaid Insurance |
181 | Property, Plant & Equipment |
189 | Accumulated Depreciation |
191 | Patent |
192 | Customer List |
194 | Goodwill |
LIABILITIES | |
211 | Accounts Payable |
221 | Notes Payable |
231 | Salaries Payable |
250 | Unearned Revenue |
261 | Income Taxes Payable |
EQUITY | |
311 | Common Stock |
331 | Retained Earnings |
REVENUE | |
411 | Sales Revenue |
EXPENSES | |
500 | Cost of Goods Sold |
511 | Insurance Expense |
512 | Utilities Expense |
521 | Salaries Expense |
532 | Bad Debt Expense |
540 | Interest Expense |
541 | Depreciation Expense |
559 | Miscellaneous Expenses |
910 | Income Tax Expense |
1. Compute the goodwill associated with the purchase of Marino.
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GENERAL JOURNAL
DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
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