On December 31st, Empresa Caribe issued 40,000 common shares. Par value $20 for the net assets of Virgin Island Corp. At the date of purchase, the market value of the shares was $35 per share. Empresas Caribe also paid $10,000 for the issuance costs of the common shares and $40,000 for the legal costs of the

Virgin Island Corp. Balance Sheet December 31, 2019

Book Value Fair Value

Cash $100,000 100,000

Accounts receivable 280,000 250,000

Inventory 520,000 640,000

Buildings and Equipment - Net 750,000 870,000

Trademark and Patents - 500,000

Total Assets $1,650,000

Accounts Payable $200,000 $190,000

Notes Payable 900,000 900,000

Total Liabilities 1,100,000

Retained Earnings 550,000

Total liabilities and Retained Earnings $1,650,000

Required A: Prepare journal entries for (1) the Business Caribe investment; (2) the purchase of the net assets, and (3) the additional direct and indirect costs related to the purchase and issuance of shares. Assume Virgin Island Corp. was dissolved.

Required B: Same instructions and information and conditions as required A, but the market value of the shares was $25 per share.

Required A leave a line for each of the entries. Margin debit and credit indented

Account Names Debit Credit

Rquired B leave a line for each of the entries. Margin debit and credit indented

Account Names Debit Credit