On January 1, NewTune Company exchanges 17,098 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 $26,700 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 (credit balances in parentheses):

	Book Values			Fair Values
Receivables	$	60,500		$	55,800
Trademarks		119,750			318,500
Record music catalog		75,500			198,500
In-process research and development		0			213,000
Notes payable		(70,500	)		(62,650	)

Precombination book values for the two companies are as follows:

	NewTune			On-the-Go
Cash	$	74,250		$	34,000
Receivables		80,750			60,500
Trademarks		423,000			119,750
Record music catalog		854,000			75,500
Equipment (net)		386,000			118,000
Total Assets	$	1,818,000		$	407,750
Accounts payable	$	(127,000	)	$	(53,250	)
Notes payable		(415,000	)		(70,500	)
Common stock		(400,000	)		(50,000	)
Additional paid-in capital		(30,000	)		(30,000	)
Retained earnings		(846,000	)		(204,000	)
Total liabilities and equities	$	(1,818,000	)	$	(407,750	)

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.

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 January 1, 20XX Assets Liabilities and Equity Cash Accounts payable Receivables Notes payable Trademarks Common stock Record music catalog Additional paid-in capital In-process research and development Retained earnings Equipment (net) Goodwill Total assets 0 Total liabilities and equities S 0 Required A Required B > Required A Required B Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their sepa identities. Prepare a worksheet to consolidate the two companies as of the combination date. (For accounts where m consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit colu worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the we Sh NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 20XX Consolidation Entries On-the-Go, Accounts Newtune Co Consolidated Debit Credit Inc. Totals Cash $ 47,550 $ 34,000 $ 81,550 Receivables 80,750 60,500 4,700 136,550 Investment in On-the-Go 423,000 119,750 198,750 741,500 Trademarks 854,000 45,500 123,000 1,052,500 Record music catalog 213,000 213,000 In-process research and development 386,000 118,000 504,000 Equipment (net) Goodwill Total assets $ 1,791,300 $ 377,750 $ 2,729,100 Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities S 0 $ 0 $ 534,750 $ 4,700 $ 0