Groomer purchased a controlling interest in three companies during 1996. Financial informa tion concerning the three companies
Question:
Groomer purchased a controlling interest in three companies during 1996. Financial informa¬ tion concerning the three companies follows. Company X Company Y Company Z Cash $ 6,000 $ 4,000 $ 2,000 Accounts receivable 12,000 9,000 7,000 Inventory 30,000 12,000 18,000 Fixed assets 70,000 30,000 15,000 Total assets $118,000 $55,000 $42,000 Current liabilities $ 7,000 $12,000 $ 5,000 Long-term liabilities 25,000 20,000 18,000 Common stock 50,000 10,000 15,000 Retained earnings Total liabilities and 36,000 13,000 4,000 stockholders’ equity $118,000 $55,000 $42,000 FMV: Inventory $ 45,000 $18,000 $18,000 Fixed assets 75,000 35,000 15,000 All other assets and liabilities on the balance sheet are at FMV. Shares of stock outstanding before acquisition 10,000 1,000 2,000 Groomer purchased 8,000, 600, and 1,500 shares of Company X, Company Y, and Com¬ pany Z, respectively. The share prices and cash payments follow. Company X 8,000 x$ 10.60 = $84,800 Company Y 600 x 40.00 = 24,000 Company Z 1,500 x 11.00 = 16,500 REQUIRED: For each company prepare the journal entry to record the acquisition by Groomer. Then, tor each company prepare a journal entry that could have been recorded to include the individual assets and liabilities on the books of Groomer.
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