Homework SourseThe following book and fair value were available for Salt co
The following book and fair value were available for Salt company as of March 1
Book value Fair value
Inventory 630,000 600,000
Land 750,000 990,000
Building 1,700,000 2,000,000
Customer Relationship - 800,000
Account Payable (80,000) (80,000)
Common stock (2,000,000)
Additional P-I-C (500,000)
Retained Earnings 1/1 (360,000)
Revenues (420,000)
Expenses 280,000
Pepper company pays $4,100,000 for all of Salt\'s common stock in a merger, after which Salt will cease to exist as a separate entity. Pepper pays $25,000 for legal fees to complete the transaction. REQUIRED: Prepare Pepper\'s journal entry to record its acquisition of Salt
Solution
Answer
| Date | Particular | Debit ($) | Credit ($) |
| 1 | Inventory | 600000 | |
| Land | 990000 | ||
| Building | 2000000 | ||
| Customer relationships | 800000 | ||
| To Capital Reseve/free reserve | 210000 | ||
| To Accounts Payable | 80000 | ||
| To Additional Paid in Capital | 4100000 | ||
| (To record assets and liabilities ) | |||
| 2 | Legal fees | 25000 | |
| To Cash | 25000 | ||
| (To Record Payment of Legal Fees) |
