Question #5

The Logan Company is purchasing the Nylon Sail Company.

The Nylon Sail Companys Balance Sheet information on June 30, 2020 is as follows:

Assets

Cash $ 43,600

Accounts Receivable 55,800

Inventories 141,000

Land 95,000

Building, net 368,000

Equipment, net 39,760

Patent 55,000

Trademark 5,000

Total Assets $803,160

Liabilities

Accounts Payable $ 59,750

Stockholders Equity

Common Stock $600,000

Retained Earnings 143,410

Total Liabilities and

Stockholders Equity $803,160

Logan Company will pay $800,000 cash down, sign and issue a Note Payable to Nylon Sail Company in the amount of $350,000, and assume the Accounts Payable. All assets listed in the balance sheet will be acquired by Logan Company at their listed amounts, with the exception of the following assets which will be acquired at their agreed fair values as follows:

Inventories $145,000

Land $175,300

Building $515,800

Patent $82,300

Trademark $15,000

Required:

1. Prepare the journal entries on Logan Companys books to record the purchase.

2. Prepare the journal entry on Nylon Sail Companys books to record the sale.

3. Prepare a list of the specific components of the gain forNylon Sail Company.

4. Prepare the Balance Sheet for Nylon Sail Company as of June 30, 2020

immediately after the sale to Logan Company.