On January 1, NewTune Company exchanges 15,000 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune'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. NewTune also paid $25,000 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 (credit balances in parentheses): Book Values Fair Values $ 63,000 Receivables Trademarks Record music catalog $ 65,000 95,000 225,000 60,000 180,000 In-process research and development 0 200,000 (50,000) (45,000) Notes payable Precombination book values for the two companies are as follows: On-the-Go Cash Receivables Trademarks Record music catalog. Equipment (net) Total Assets Accounts payable Notes payable NewTune $ 60,000 $ 29,000 150,000 65,000 400,000 95,000 840,000 60,000 320,000 105,000 $ 1,770,000 $ 354,000 $ (110,000) $ (34,000) Common stock Additional paid-in capital Retained earnings Total liabilities and equities (370,000) (50,000) (400,000) (50,000) (30,000) (30,000) (860,000) (190,000) $(1,770,000) $(354,000) a. Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of NewTune. On- the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for NewTune as of the acquisition date. b. Assume that no dissolution takes place in connection with this combiriation. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date. Required A Required B Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of NewTune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for NewTune as of the acquisition date. NEWTUNE COMPANY AND ON-THE-GO, INC. Post-Combination Balance Sheet Cash Receivables Assets January 1, 20XX Liabilities and Equity Accounts payable Notes payable Common stock Trademarks Record music catalog In-process research and development Equipment (net) Goodwill Additional paid-in capital Retained earnings Total assets Total liabilities and equities Required A Required 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.) + NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 20XX Show less A Accounts Cash Receivables Investment in On-the-Go Trademarks Record music catalog In-process research and development | Equipment (net) Goodwill Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities Consolidation Entries Newtune Co On-the- Go,Inc. Debit Credit Consolidated Totals < Required A Required B >