I need help solving Problem 1-6 in my Advanced Accounting Class. py Kecord the a

Question

I need help solving Problem 1-6 in my Advanced Accounting Class.

py Kecord the acquisition r port the acquisition entries Problem, 1-6 (LO3·4) Cash purchase with goodwill. plating the acquisition of the net assets of Sylvester Corpora its operations. The balance sheet of Sylvester Corporation on December 31, 2015, is as Tweeden Corporation is contem- tion in anticipation of expanding follows: Sylvester Corporation Balance Sheeh December 31, 2015 Current liabilities: Accounts payable Payroll and benefitrelated liabilities Current assets: 45,000 12,500 24,000 56,000 31,000 18,000 Inventory Other current assets.... Debt maturing in one year.. 10,000 $129,000 Total current liabilities .. 67,500 Total current assets... Investments Fixed assets Land Building. .. 65,000 32,000 245,000 Other liabilities: Long term debt Payroll and benefitrelated liabilities $248,000 156,000 387 0664,000 404,000 Total fixed assets.. Intangibles: Goodwill 45,000 ...23,000 10,000 Stockholders' equity: Common stock Paid-in capital in excess of par .. $100,000 250,000 114,500 Trade names 464,500 $936,000 78,000 Total equity Total intangibles Total assets . 936,000TotdlIcblis ad y An appraiser for Tweeden determined the fair values of Sylvester's assets and liabilities to be as shown on next page.

Explanation / Answer

since tweden corporation purchased at fair values it records the entries as follows:-

1.

business purchase a/c Dr 580000

to sylvester corporation a/c 580000

2.notes receivable a/c Dr. 24000   

accounts receivable a/c Dr. 56000

inventory a/c Dr. 30000

othercurrent assets a/c Dr. 15000

investments a/c Dr 63000

land a/c Dr 55000

building a/c Dr 275000

equipment a/c Dr 426000

patents a/c Dr 20000

trade names a/c Dr 15000

goodwill a/c (balancing figure) Dr 72500

to accounts payable a/c 45000

to payroll and benefit related liabilities a/c(current )12500

to debt maturing in 1year a/c 10000

to long term debt a/c 248000

to payroll and benefit related liabilities a/c(long) 156000

to business purchase a/c 580000

  

3.

sylvester corporation a/c Dr 580000

liquidation expenses a/c Dr 20000

to cash 600000

note:- company purchased the netassets of worth 507500 for 580000 which is excess of its value and hence excess to be recognised as goodwill.

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