On January 1, 2018, Marshall Company acqulred 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall Issued $265,000 In long-term labilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall pald $29,500 to accountants, lawyers, and brokers for assistance In the acquisltion and another $14,500 In connection with stock Issuance costs. Prior to these transactions, the balance sheets for the two companles were as follows: Marshall Company Book Value $ 68,688 Tucken Company Book Value 31,288 188,880 177,808 191,808 262,8e8 Cash Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value Common stock-$28 par value Additional paid-in capital Retained earnings, 1/1/18 295,8e8 413,808 243,800 491,888 238,8ee 72,3ee (62,488) (162,888) (581,90) (265,808) (118,808) (128,808) (368,888) (599,688) (394,18) Note: Parentheses Indicate a credit balance In Marshall's appralsal of Tucker, It deemed three accounts to be undervalued on the subsidlary's books: Inventory by $5,000, Land by $14.400, and Bulldings by $25.000. Marshall plans to malntain Tucker's separate legal Identity and to operate Tucker as a wholly owned subsldlary. a. Determine the amounts that Marshall Company would report In its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to Income accounts from the acquisition should be closed to Marshall's retalned earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared In recording the acquisition. b. To vertfy the answers found In part (a), prepare a worksheet to consolidate the balance sheets of these two companles as of January 1, 2018 Required A Required B Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall's retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition. Consolidated Totals Cash Receivables Inventory Land Buildings (net Equipment (net) Total assets Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings Total liabilities and equities Required A Required B To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018. (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.) Show less MARSHALL COMPANY AND CONSOLIDATED SUBSIDIAR Worksheet January 1, 2018 Consolidation Entries Consolidated Marshall Tucker Accounts Company Company Totals Credit Cash Receivables Inventory Land Buildings (net) Equipment (net) Investment in Tucker Total assets Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings, 1/1/18 Total liabilities and owners equities
