Question
On June 30, 2013, Wisconsin, Inc., issued $300,000 in debt and 15,000 new shares of its $10 par value stock to Badger Company owners in
On June 30, 2013, Wisconsin, Inc., issued $300,000 in debt and 15,000 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2013, were as follows:
Wisconsin
Badger
Revenues
$ (900,000)
$ (300,000)
Expenses
660,000
200,000
Net income
$ (240,000)
$ (100,000)
Retained earnings, 1/1
$ (800,000)
$ (200,000)
Net income
(240,000)
(100,000)
Dividends paid
90,000
0
Retained earnings, 6/30
$ (950,000)
$ (300,000)
Cash
$ 80,000
$ 110,000
Receivables and inventory
400,000
170,000
Patented technology (net)
900,000
300,000
Equipment (net)
700,000
600,000
Total assets
$ 2,080,000
$ 1,180,000
Liabilities
$ (500,000)
$ (410,000)
Common stock
(360,000)
(200,000)
Additional paid-in capital
(270,000)
(270,000)
Retained earnings
(950,000)
(300,000)
Total liabilities and equities
$(2,080,000)
$(1,180,000)
Wisconsin also paid $30,000 to a broker for arranging the transaction. In addition, Wisconsin paid $40,000 in stock issuance costs. Badger's equipment was actually worth $700,000, but its patented technology was valued at only $280,000.
What are the consolidated balances for the following accounts?
- Net income.
- Retained earnings, 1/1/13.
- Patented technology.
- Goodwill.
- Liabilities.
- Common stock.
- Additional paid-in capital.
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