On January 1, NewTune Company exchanges 18,668 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 $33,550 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	$	47,250			$	44,850
Trademarks		114,500				302,750
Record music catalog		84,250				251,500
In-process research and development		0				235,500
Notes payable		(70,250	)			(64,950	)

Precombination book values for the two companies are as follows:

NewTune

On-the-Go

Cash

$

71,250

$

39,250

Receivables

79,750

47,250

Trademarks

460,000

114,500

Record music catalog

858,000

84,250

Equipment (net)

379,000

127,000

Totals

$

1,848,000

$

412,250

Accounts payable

$

(184,000

)

$

(34,500

)

Notes payable

(372,000

)

(70,250

)

Common stock

(400,000

)

(50,000

)

Additional paid-in capital

(30,000

)

(30,000

)

Retained earnings

(862,000

)

(227,500

)

Totals

$

(1,848,000

)

$

(114,500

)

a. 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.

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

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.
Consolidation Worksheet
January 1, 2018
			Consolidation Entries
Accounts	Newtune Co	On-the-Go, Inc.	Debit	Credit	Consolidated Totals
Cash	not attempted	not attempted	not attempted	not attempted	not attempted
Receivables	not attempted	not attempted	not attempted	not attempted	not attempted
Investment in On-the-Go	not attempted	not attempted	not attempted	not attempted	not attempted
Trademarks	not attempted	not attempted	not attempted	not attempted	not attempted
Record music catalog	not attempted	not attempted	not attempted	not attempted	not attempted
Research and development asset	not attempted	not attempted	not attempted	not attempted	not attempted
Equipment	not attempted	not attempted	not attempted	not attempted	not attempted
Goodwill	not attempted	not attempted	not attempted	not attempted	not attempted
Total assets	$0	$0			$0
Accounts payable	not attempted	not attempted	not attempted	not attempted	not attempted
Notes payable	not attempted	not attempted	not attempted	not attempted	not attempted
Common stock	not attempted	not attempted	not attempted	not attempted	not attempted
Additional paid-in capital	not attempted	not attempted	not attempted	not attempted	not attempted
Retained earnings	not attempted	not attempted	not attempted	not attempted	not attempted
Total liabilities and equities	$0	$0	$0	$0	$0