Advanced Accounting Chapter 2 Homework Problem (10 points) On June 30, Malone Music Company exchanges 17,098 shares of its common stock for 100% of the outstanding shares of Nave Sound, Inc. Malone will maintain Nave as a wholly owned subsidiary, and Nave will retain its own legal and accounting status. Each of Malone'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 Nave's fair value. Malone also paid $26,700 in stock registration and issuance costs in connection with the merger. Just prior to the acquisition, the following data for Nave was available! Book Values Fair Values Receivables $ 60,500 $ 55,800 Trademarks 119,750 318,500 Licensed Song Lyrics 75,500 198,500 In-process Music Videos Notes payable (70,500 (62,650) Malone and Nave had the following account balances just prior to the acquisition: Malone Nave Cash $ 74,250 $ 34,000 Receivables 80,750 60,500 Trademarks 423,000 119,750 Licensed Song Lyrics 854,000 75,500 Equipment (net) 386,000 118,000 Totals $ 1,818,000 $ 407.750 Accounts payable $ (127,000) $ (53,250) Notes payable (415,000) (70,500) Common stock (400,000) (50,000) Additional pald-In capital (30,000) (30,000) Retained earnings (846,000) (204,000) Totals $(1,818,000) $(119.750) 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. Prepare the following: 1. Malone's entries to record the Nave acquisition 2. Consolidation entries necessary to prepare the worksheet for part 3. 3. A post acquisition consolidation worksheet as of June 30. Malone's column in the consolidation worksheet should reflect post combination balances