Question
Pancor Corporation paid cash of $165,000 to acquire Sink Companys net assets on February 1, 20X3. The balance sheet data for the two companies and
Pancor Corporation paid cash of $165,000 to acquire Sink Companys net assets on February 1, 20X3. The balance sheet data for the two companies and fair value information for Sink immediately before the business combination were:
Pancor Corporation Sink Company Balance Sheet ItemBook Value Book Value Fair Value Assets Cash $247,000 $13,000 $13,000 Accounts Receivable 145,000 33,000 33,000 Inventory 173,000 49,000 48,000 Patents 98,000 50,000 55,000 Buildings & Equipment 397,000 326,000 143,000 Less: Accumulated Depreciation (180,000) (190,000) Total Assets $880,000 $281,000 $292,000 Liabilities & Equities Accounts Payable $66,000 $65,000 $65,000 Notes Payable 136,000 121,000 121,000 Common Stock: $10 par value 187,000 $8 par value 15,000 Additional Paid-In Capital 143,000 5,000 Retained Earnings 348,000 75,000 Total Liabilities & Equities $880,000 $281,000Required: a. Prepare the journal entry recorded by Pancor Corporation when it acquired Sinks net assets. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the acquisition of Sink Company's net assets.
Prepare a balance sheet for Pancor immediately following the acquisition. (Amounts to be deducted should be indicated by minus sign.)
c. Prepare the journal entry to be recorded by Pancor if it acquires all of Sinks common stock for $165,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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