On January 1, 2015, New Tune Company exchanges 18.235 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 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 $24,100 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 Receivables Trademarks Record music catalog In-process research and development Notes payable Book Values $ 42,750 118,750 80,250 0 (52,500) Fair Values $ 38,400 308,500 248,250 218,250 (46,100) Precombination January 1, 2015, book values for the two companies are as follows Cash Receivables Trademarks Record music catalog Equipment (net) New Tune $ 66,500 153,500 463.000 851,000 333,000 On-the-Go $ 31,750 42,750 118,750 80,250 117.000 Totals $ 1,867,000 $390,500 Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings $ (151.000) $ (37.000) (406.000) (52,500) (400.000) (50.000) (30,000) (30.000) (880,000) (221,000) Totals $(1,867,000) $(390,500) Note: Parentheses indicate a credit balance. a. Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of New Tune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for New Tune as of the acquisition date. NEWTUNE COMPANY AND ON-THE-GO, INC. Post-Combination Balance Sheet January 1, 2015 Assets Liabilities and Owners' Equity Cash Accounts payable Receivables AN Notes payable Trademarks Common stock Record music catalog Additional paid-in capital Research and development asset Retained earnings Equipment Goodwill Total assets Total liabilities and equities b. Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Consolidated Totals | NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 2015 Consolidation Entries Accounts Newtune Co On the Go Debit Credit Cash Receivables | Investment in On-the-Go Trademarks Record music catalog Research and development asset Equipment Goodwill Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings | Total liabilities and equities TUTTI II. |