Question
On January 1, 20X2, Prost Company acquired all of SKK Corporations assets and liabilities by issuing 24,700 shares of its $6 par value common stock.
On January 1, 20X2, Prost Company acquired all of SKK Corporations assets and liabilities by issuing 24,700 shares of its $6 par value common stock. At that date, Prost shares were selling at $23 per share. Historical cost and fair value balance sheet data for SKK at the time of acquisition were as follows:
Balance Sheet Item | Historical Cost | Fair Value | |||||||||
Cash & Receivables | $ | 21,000 | $ | 21,000 | |||||||
Inventory | 109,000 | 114,000 | |||||||||
Buildings & Equipment | 603,000 | 466,000 | |||||||||
Less: Accumulated Depreciation | (238,000 | ) | |||||||||
Total Assets | $ | 495,000 | $ | 601,000 | |||||||
Accounts Payable | $ | 59,000 | $ | 59,000 | |||||||
Notes Payable | 83,000 | 81,000 | |||||||||
Common Stock ($10 par value) | 169,000 | ||||||||||
Retained Earnings | 184,000 | ||||||||||
Total Liabilities & Equities | $ | 495,000 | |||||||||
Prost paid legal fees for the transfer of assets and liabilities of $16,000. Prost also paid audit fees of $30,000 and listing application fees of $14,000, both related to the issuance of new shares.
Required: Prepare the journal entries made by Prost to record the business combination. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
A. Record the payment of legal fees
B. Record ther cost of issuing stock
C. Record the purchase of SKK Corporation
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