1. Weakfish Company purchased 100% of Squeteague Company on January 1, 2020 for $950,000 by issuing 200,000 shares of its $2 par common stock. The book value of Squeteague at the time was $800,000 with the excess attributed to goodwill and equipment equally. There were direct expenses $10,000 and indirect expenses of $40,000. The purchase is an acquisition or consolidation.

1. Record the acquisition on January 1, 2020 on the books of Weakfish.

b.

1. Assume that the balance sheets immediately after the acquisition are below. Show the elimination/consolidation entries to put them together on the worksheet. Do not extend the balances.

Weakfish Squeteague Dr. Cr.

Cash $ 100,000 $ 50,000

Receivables 50,000 20,000

Investment in S. 950,000

Property & Equipment 600,000 830,000

Goodwill ________ ________ $1,700,000 $900,000

Liabilities

Payables $ 250,000 $ 100,000

Capital Stock 500,000 400,000 Additional Paid in Cap 800,000

Retained Earnings 150,000 400,000 $1,700,000 $ 900,000