Problem 1-40 (Static) Comprehensive Business Combination LO 1-5\ Pintime Industries Incorporated entered into a business combination agreement with Sydrolized Chemical Corporation (SCC) to ensure an uninterrupted supply of key raw materials and to realize certain economies from combining the operating processes and the marketing efforts of the two companies. Under the terms of the agreement, Pintime issued 180,000 shares of its $1 par common stock in exchange for all of SCC's assets and liabilities. The Pintime shares then were distributed to SCC's shareholders, and SCC was liquidated.\ \ Immediately prior to the combination, SCC's balance sheet appeared as follows, with fair values also indicated:\ \ Book Values Fair Values\ Assets \ Cash $ 28,000 $ 28,000\ Accounts Receivable 258,000 251,500\ Less: Allowance for Bad Debts (6,500) \ Inventory 381,000 395,000\ Long-Term Investments 150,000 175,000\ Land 55,000 100,000\ Rolling Stock 130,000 63,000\ Plant and Equipment 2,425,000 2,500,000\ Less: Accumulated Depreciation (614,000) \ Patents 125,000 500,000\ Special Licenses 95,800 100,000\ Total Assets $ 3,027,300 $ 4,112,500\ Liabilities \ Current Payables $ 137,200 $ 137,200\ Mortgages Payable 500,000 520,000\ Equipment Trust Notes 100,000 95,000\ Debentures Payable 1,000,000 950,000\ Less: Discount on Debentures (40,000) \ Total Liabilities $ 1,697,200 $ 1,702,200\ Stockholders Equity \ Common Stock ($5 par) 600,000 \ Additional Paid-In Capital from Common Stock 500,000 \ Additional Paid-In Capital from Retirement of Preferred Stock 22,000 \ Retained Earnings 220,100 \ Less: Treasury Stock (1,500 shares) (12,000) \ Total Liabilities and Equity $ 3,027,300 \ Immediately prior to the combination, Pintime's common stock was selling for $14 per share. Pintime incurred direct costs of $135,000 in arranging the business combination and $42,000 of costs associated with registering and issuing the common stock used in the combination.\ \ Required:\ Prepare all journal entries that Pintime should have entered on its books to record the business combination.\ Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.\ \ \ \ Prepare all journal entries that should have been entered on SCC's books to record the combination and the distribution of the stock received.\ Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.\ \ \ \ PrevQuestion 12 of 12 Total12 of 12Visit question mapThis is the last question in the assignment. To submit, use Alt + S. To access other questions, proceed to the question map button.Next