****Prepare the journal entry to record Palmer's investment in Stevens.
****Prepare the journal entry to record Palmer's investment in Stevens.
Stevens Company Date of Acquisition - January 1, 2014 On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000 cash. An examination of Stevens Company's assets and liabilities revealed the following at the date of acquisition: Stevens Company Balance Sheet As of January 1, 2014 Book Value Cash 130,726 Accounts receivable 200,000 Inventories 160,000 Equipment, net 200,000 Land 190,000 Other 54,830 Total assets 935,556 Fair Value 130,726 200,000 210,000 260,000 290,000 54,830 40,000 205,556 Note payable Bonds payable Common stock Retained earnings Total liabilities and equity 40,000 205,556 500,000 190,000 935,556 Additional Information Date of Acquisition Stevens Company's equipment had an original life of 15 years and a remaining useful life of 10 years. All the inventory was sold in 2014. Palmer Company Date of Acquisition - January 1, 2014 (before acquisition of Stevens was made) Cash Accounts receivable Note receivable Inventory Equipment, net Land Total Book Value 1,179,300 222,600 40,000 130,400 200,000 160,000 1,932,300 Accounts payable Common stock Other contributed capital Retained earnings Total 270,500 400,000 1,000,000 261,800 1,932,300 Additional Information - Date of Acquisition Note the following transaction of interest between Palmer and Stevens: a) Stevens Company's notes payable included $40,000 due to Palmer Company. Palmer Company's General Ledger Entry # Entry Date Account Name Debit Credit Stevens Company Date of Acquisition - January 1, 2014 On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000 cash. An examination of Stevens Company's assets and liabilities revealed the following at the date of acquisition: Stevens Company Balance Sheet As of January 1, 2014 Book Value Cash 130,726 Accounts receivable 200,000 Inventories 160,000 Equipment, net 200,000 Land 190,000 Other 54,830 Total assets 935,556 Fair Value 130,726 200,000 210,000 260,000 290,000 54,830 40,000 205,556 Note payable Bonds payable Common stock Retained earnings Total liabilities and equity 40,000 205,556 500,000 190,000 935,556 Additional Information Date of Acquisition Stevens Company's equipment had an original life of 15 years and a remaining useful life of 10 years. All the inventory was sold in 2014. Palmer Company Date of Acquisition - January 1, 2014 (before acquisition of Stevens was made) Cash Accounts receivable Note receivable Inventory Equipment, net Land Total Book Value 1,179,300 222,600 40,000 130,400 200,000 160,000 1,932,300 Accounts payable Common stock Other contributed capital Retained earnings Total 270,500 400,000 1,000,000 261,800 1,932,300 Additional Information - Date of Acquisition Note the following transaction of interest between Palmer and Stevens: a) Stevens Company's notes payable included $40,000 due to Palmer Company. Palmer Company's General Ledger Entry # Entry Date Account Name Debit Credit
