On February 1, 2014, Punto Company purchased 95% of the outstanding common stock of Sara Company and 35% of the outstanding common stock of Rob Company. Immediately before the two acquisitions, balance sheets of the three companies were as follows: Cash $159,600 $ 45,900 $15,500 Accounts receivable 32,000 31,700 23,400 Notes receivable 18,400 707 707 Merchandise inventory 95,900 33,900 14,200 Prepaid insurance 12,900 2,600 500 Advam to Sara Company 10,100 Advances to Rob Company 4,700 Land 249,100 46,100 14,200 Buildings (net) 95,000 23,500 15,400 Equipment (net) 32,500 9,000 2,000 Total $710,200 $197,300 $07,200 Accounts payable $25,200 $21,300 $10,900 Income taxes payable 29,500 9,400 707 Notes payable 0 6,200 10,600 Bonds payable 97,300 707 707 Common stock, $10 par value 284,800 138,900 39,100 Other contributed capital 153,000 12,900 36,700 Retained earnings (deficit) 119,400 3,500 (10,100 3 Total $71 200 $19 The followmg additional information is relevant. 1. One week before the acquisitions, Punto Company had advanced $10,100 to Sara Company and $4,700 to Rob Company. Sara Company recorded an increase to Accounts Payable for its advance, but Rob Company had not recorded the transaction. 2. On the date ofacquisition, Punto Company owed Sara Company $11,100 for purchases on account, and Rob Company owed Punto Company $2,700 and Sara Company $5,700 for such purchases. The goods purchased had all been sold to outside parties prior to acquisition. 3. Punto Company exchanged 14,800 shares of its common stock with a fair value of $13 per share for 95% ofthe outstanding common stock ofSara Company. In addition, stock issue fees of $4,400 were paid in cash. The acquisition was accounted for as a purchase. 4. Punto Company paid $50,800 cash for the 85% interest in Rob Company. $3,000 oFSara Company's notes payable and $9,500 of Rob Company's notes payable were payable to Funto Company. 5. Assume that for Sara, any difference between book value and the value implied by the purchase price relates to subsidiary land. However, for Rob, assume that any excess of book value over the value implied tn] the purchase price is due to overvalued buildings. F' Give the book entries to record the two acquisitions in the accounts of Punto Company. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (To record acquisition of Sara Co.) (To record acquisition of Rob Co.)
