On January 1, 2021, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $300,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $29,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $14,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/21 Marshall Company Book Value $ 69,900 364,000 360,000 280,000 482,000 160,000 (210,000) (496,000) (110,000) Tucker Company Book Value $ 30,000 117,000 198,000 194,000 308,000 72,900 (52,800) (300,000) (360,000) (539,900) (120,000) 0 (447,100) Note: Parentheses indicate a credit balance. In Marshall's appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary's books: Inventory by $9,500, Land by $22,800, and Buildings by $33,000. Marshall plans to maintain Tucker's separate legal identity and to operate Tucker as a wholly owned subsidiary. 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 retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition. b. To verify the answers found part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2021. 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. (Input all amounts as positive values.) Show less A Consolidated Totals Cash Receivables Inventory Land Buildings (net) Equipment (net) Total assets $ 0 Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings Total liabilities and equities 0 MARSHALL COMPANY AND CONSOLIDATED SUBSIDIARY Worksheet January 1, 2021 Consolidation Entries Accounts Marshall Company Tucker Company Consolidated Totals Debit Credit Cash Receivables Inventory Land Buildings (net) Equipment (net) Investment in Tucker Total assets $ 0 $ 0 $ 0 Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings, 1/1/21 Total liabilities and equities $ 0 $ 0 $ 0 $ 0 $ 0
