Please Provide Working Notes.
On January 1, NewTune Company exchanges 18,430 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 $32,700 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): 84,200 Receivables Trademarks Record music catalog In-process research and development Notes payable Book Values Fair Values $ 86,500 $ 116,250 280,500 68,750 260,750 215,250 (64,000) (54,600) 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 Total liabilities and equities NewTune On-the-Go $ 67,750 $ 37,250 104,250 86,500 414,000 116,250 837,000 68,750 382,000 113,000 $ 1,805,000 $ 421,750 $ (116, 000) $ (47,250) (391,000) (64,000) (400,000) (50,000) (30,000) (30,000) (868,000 (230,500) $(1,805, 000) $ (421,750) 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. 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. Complete this question by entering your answers in the tabs below. 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 New Tune. 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, 20XX Assets Liabilities and Equity Cash Accounts payable Receivables Notes payable Trademarks Common stock Record music catalog Additional paid-in capital In-process research and development Retained earnings Equipment (net) Goodwill Total assets $ 0 Total liabilities and equities $ 0 Complete this question by entering your answers in the tabs below. Required A Required 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. (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 Consolidated Totals NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 20XX Consolidation Entries Accounts On-the-Go, Newtune Co Inc. Debit Credit Cash Receivables Investment in On-the-Go Trademarks Record music catalog In-process research and development Equipment (net) Goodwill Total assets 0 $ Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
