Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On June 30, 2012, Tara, Inc. issued $450,000 in debt and 20,000 new shares of its $10 par value stock to Todd Company owners

image text in transcribed

On June 30, 2012, Tara, Inc. issued $450,000 in debt and 20,000 new shares of its $10 par value stock to Todd Company owners in exchange for all of the outstanding shares of that company. Tara shares had a fair value of $50 per share. Prior to the combination, the financial statements for Tara and Todd for the six-month period ending June 30, 2012, were as follows: Revenue Expenses Net income Tara Todd $ 1,485,000 $495,000 1,089,000 330,000 $396,000 $165,000 Retained earnings, 1/1 $1,320,000 $330,000 Net income 396,000 165,000 Dividends paid 148,500 Retained earnings, 6/30 $1,567,500 $495,000 Cash Receivables and inventory $132,000 $181,500 660,000 280,500 Patented technology (net) 1,485,000 495,000 Equipment (net) Total assets 1,155,000 990,000 $3,432,000 $ 1,947,000 Liabilities $825,000 $676,500 Common stock 594,000 330,000 Additional paid-in capital 445,500 445,500 Retained earnings 1,567,500 495,000 Total liabilities and equities $3,432,000 $ 1,947,000 Tara also paid $35,000 to a broker for arranging the transaction. In addition, Tara paid $55,000 in stock issuance costs. Todd's equipment was actually worth $1,050,000, but its patented technology was only valued at $350,000. What is the consolidated common stock balance and additional paid-in capital balance after the merger?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management and Cost Accounting

Authors: Colin Drury

8th edition

978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887

More Books

Students also viewed these Accounting questions