Homework SourseOn January 2 2016 Revolution Co issued 150000 new shares of
On January 2, 2016, Revolution Co. issued 150,000 new shares of its $1 par value common stock valued at $16 a share for all of Founders, Inc.’s outstanding common shares. The fair value and book value of Founders’ identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2016, is as follows:
Required: Prepare a consolidated balance sheet for Revolution Co. immediately after the business combination.
| Revolution | Founders | |
| Cash | $ 250,000 | $ 180,000 |
| Inventories | $ 320,000.00 | $ 600,000.00 |
| Other Current Assets | $ 600,000.00 | $ 400,000.00 |
| Land | $ 350,000.00 | $ 500,000.00 |
| Property, Plant & Equipment | $ 5,100,000.00 | $ 2,000,000.00 |
| Total Assets | $6,620,000 | $3,680,000 |
| Accounts Payable | $ 800,000 | $ 350,000.00 |
| Notes Payable | $ 1,800,000.00 | $ 1,150,000.00 |
| Common Stock, $1 par | $ 2,000,000.00 | $ 1,000,000.00 |
| Additional Paid-in Capital | $ 1,000,000.00 | $ 350,000.00 |
| Retained Earnings | $ 1,020,000.00 | $ 830,000.00 |
| Total Liabilities & Equities | $ 6,620,000.00 | $ 3,680,000.00 |
Solution
Journal:
| Beforer acquisition | Adjustments | Consolidated amount | |||
| Revolution | Founders | Debit | Credit | Consolidated amount | |
| Cash | 2,50,000 | 1,80,000 | - | - | 4,30,000 |
| Inventories | 3,20,000 | 6,00,000 | - | - | 9,20,000 |
| Other Current Assets | 6,00,000 | 4,00,000 | - | - | 10,00,000 |
| Land | 3,50,000 | 5,00,000 | - | - | 8,50,000 |
| Property, Plant & Equipment | 51,00,000 | 20,00,000 | - | - | 71,00,000 |
| Goodwill | - | - | 2,20,000 | - | 2,20,000 |
| Total Assets | 66,20,000 | 36,80,000 | - | - | 1,05,20,000 |
| Accounts Payable | 8,00,000 | 3,50,000 | - | - | 11,50,000 |
| Notes Payable | 18,00,000 | 11,50,000 | - | - | 29,50,000 |
| Common Stock, $1 par | 20,00,000 | 10,00,000 | 10,00,000 | 1,50,000 | 21,50,000 |
| Additional Paid-in Capital | 10,00,000 | 3,50,000 | 3,50,000 | 22,50,000 | 32,50,000 |
| Retained Earnings | 10,20,000 | 8,30,000 | 8,30,000 | - | 10,20,000 |
| Total Liabilities & Equities | 66,20,000 | 36,80,000 | - | - | 1,05,20,000 |
