On January 1, NewTune Company exchanges 16,888 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 $38,600 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): Values Receivables Trademarks Record music catalog In-process research and development Notes payable Book Fair Values $ 29, 250 $ 22,900 106,500 282,000 67,000 190,000 0 221,250 (62,500) (54,500) Precombination book values for the two companies are as follows: NewTune On-the-Go Cash $ 64,000 $ 45,000 Receivables 117,000 29, 250 Trademarks 494,000 106,500 Record music catalog 868,000 67,000 Equipment (net) 402,000 150,000 Total Assets $ 1,945,000 $ 397,750 Accounts payable $ (158,000) $ (44,750) Notes payable (450,000) (62,500) Common stock (400,000) (50,000) Additional paid-in capital (30,000) (30,000) Retained earnings (907,000) (210,500) Total liabilities and equities $(1,945,000) $(397,750) 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 combination. 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 New Tune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for New Tune as of the acquisition date. NEWTUNE COMPANY AND ON-THE-GO, INC. Post-Combination Balance Sheet January 1, 20XX Assets Liabilities and Equity Accounts payable Notes payable Cash Receivables Trademarks Common stock Additional paid-in capital Retained earnings Record music catalog In-process research and development Equipment (net) Goodwill Total assets $ 0 Total liabilities and equities 0 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.) Show less A NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 20XX Consolidation Entries Newtune Co On-the-Go, Debit Inc. Credit Accounts Consolidated Totals Cash Receivables Investment in On-the-Go Trademarks Record music catalog In-process research and development Equipment (net) Goodwill Total assets $ 0 $ 0 $ 0 Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities $ 0 $ 0 $ 0 $ 0 $ 0