PROBLEM 1:

GAGA AND BIEBER COMPANIES HAVE THE FOLLOWING BALANCE SHEETS ON JANUARY 1, 2016

GAGA BIEBER

CASH 10,000,000 500,000

A/R 5,000,000 200,000

EQUIPMENT 10,000,000 1,000,000

A/D EQUIPMENT 1,000,000 100,000

LAND 1,000,000 200,000

TOTAL ASSETS 25,000,000 1,800,000

NOTE PAYABLE 5,000,000 800,000

COMMON STOCK 10,000,000 600,000

RETAINED EARNINGS 10,000,000 400,000

ON JANUARY 2^ND GAGA ACQUIRED ALL OF THE OUTSTANDING STOCK OF BIEBER COMPANY FROM BIEBERS STOCKHOLDERS BY ISSUING 500,000 SHARES OF GAGA STOCK WHEN GAGA HAD A MARKET VALUE OF $5 PER SHARE. ON JANUARY 2^ND THE FAIR MARKET VALUE OF BIEBERS EQUIPMENT WAS $1,100,000 AND THE FAIR MARKET VALUE OF BIEBERS LAND WAS $50,000. BIEBER WILL CONTINUE TO EXIST AFTER THIS ACQUISITION.

REQUIRED:

MAKE THE JOURNAL ENTRY GAGA MAKES WHEN IT ACQUIRES ALL OF THE STOCK OF BIEBER BY ISSUING ITS 500,000 SHARES

MAKE THE JOURNAL ENTRY BIEBER MAKES WHEN ITS STOCKHOLDERS SELLTHEIR STOCK TO GAGA FOR GAGA STOCK

PREPARE A CONSOLIDATED BALANCE SHEET ON JANUARY 3^RD

PREPARE ANY NECESSARY WORKSHEET ENTRIES NEEDED TO CONSTRUCT THE CONSOLIDATED BALANCE SHEET