On January 1, NewTune Company exchanges 17,049 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 $37,300 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	$	77,500			$	72,400
Trademarks		108,000				238,500
Record music catalog		75,500				197,750
In-process research and development		0				262,500
Notes payable		(68,500	)			(60,400	)

Precombination book values for the two companies are as follows:

	NewTune				On-the-Go
Cash	$	73,250			$	44,000
Receivables		152,750				77,500
Trademarks		462,000				108,000
Record music catalog		875,000				75,500
Equipment (net)		360,000				117,000
Totals	$	1,923,000			$	422,000
Accounts payable	$	(172,000	)		$	(53,000	)
Notes payable		(462,000	)			(68,500	)
Common stock		(400,000	)			(50,000	)
Additional paid-in capital		(30,000	)			(30,000	)
Retained earnings		(859,000	)			(220,500	)
Totals	$	(1,923,000	)		$	(108,000	)

1. Assume that this combination is a statutory merger so that On-the-Gos 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.
2. 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.

NEWTUNE COMPANY AND ON-THE-GO, INC.
Post-Combination Balance Sheet
January 1, 2018
Assets		Liabilities and Stockholders' Equity
Cash		Accounts payable
Receivables		Notes payable
Trademarks		Common stock
Record music catalog		Additional paid-in capital
Research and development asset		Retained earnings
Equipment
Goodwill
Total assets	$	Total liabilities and equities	$

NEWTUNE COMPANY AND ON-THE-GO, INC.
Consolidation Worksheet
January 1, 2018
			Consolidation Entries
Accounts	Newtune Co	On-the-Go, Inc.	Debit	Credit	Consolidated Totals
Cash
Receivables
Investment in On-the-Go
Trademarks
Record music catalog
Research and development asset
Equipment
Goodwill
Total assets	$	$			$
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities	$	$	$	$	$