On January 1, NewTune Company exchanges 17,360 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 $44,650 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): Receivables Trademarks Record music catalog In-process research and development Notes payable Book Values Fair Values $ 44,250 $ 41,300 117,250 277,750 66,000 186,750 0 261,000 (54,750) (48,350) Precombination book values for the two companies are as follows: Cash Receivables Trademarks Record music catalog Equipment (net) Total Assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings NewTune On-the-Go $ 62,000 $ 50,250 125,000 44,250 441,000 117,250 873,000 344,000 66,000 108,000 $ 1,845,000 $ 385,750 $ (150,000) $ (43,500) (378,000) (54,750) (400,000) (50,000) (30,000) (887,000) (30,000) (207,500) Total liabilities and equities $ (1,845,000) $(385,750) 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 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 Trademarks Record music catalog In-process research and development Equipment (net) Goodwill Total assets January 1, 20XX EA Liabilities and Equity Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings 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 Cash NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 20XX Consolidation Entries Accounts Newtune Co On-the-Go, Inc. Debit Credit Consolidated Totals Receivables Investment in On-the-Go Trademarks Record music catalog In-process research and development Equipment (net) Goodwill Total assets Accounts payable Notes payable $ 0 $ 0 $ 0 Common stock Additional paid-in capital Retained earnings Total liabilities and equities $ 0 $ 0 $ 0 $ 0 $ 0