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 NewTunes 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-Gos fair value. NewTune also paid $25,000 in stock registration and issuance costs in connection with the merger. Several of On-the-Gos accounts fair values differ from their book values on this date:

Book Values Fair Values Receivables $ 65,000 $ 63,000 Trademarks 95,000 225,000 Record music catalog 60,000 180,000 In-process research and development 0 200,000 Notes payable (50,000) (45,000)

Precombination book values for the two companies are as follows:

NewTune OntheGo Cash $ 60,000 $ 29,000 Receivables 150,000 65,000 Trademarks 400,000 95,000 Record music catalog 840,000 60,000 Equipment (net) 320,000 105,000 Totals $ 1,770,000 $ 354,000

Accounts payable $ (110,000) $ (34,000) Notes payable (370,000) (50,000) Common stock (400,000) (50,000) Additional paid-in capital (30,000) (30,000) Retained earnings (860,000) (190,000) Totals $(1,770,000) $(354,000)

a. Assume that this combination is a statutory merger so that On-theGos accounts will be transferred to the records of NewTune. Onthe-Go will be dissolved and will no longer exist as a legal entity. Prepare all journal entries applicable as well as the Goodwill calculation for NewTune as of the acquisition date.