On January 2, 2013, Illinois Corporation issued 200,000 new shares of its $5 par

Question

On January 2, 2013, Illinois Corporation issued 200,000 new shares of its $5 par value common stock valued at $19 a share for all of North Dakota Company's outstanding common shares. The fair value and book value of North Dakota's identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2013 is as follows: Illionois North Dakota Cash $ 150,000 $ 240,000 Inventories 320,000 800,000 Other current assets 500,000 1,000,000 Land 350,000 500,000 Property, plant & equipment 4,000,000 3,000,000 Total Assets $5,320,000 $5,540,000 Accounts payable $1,000,000 $ 600,000 Notes payable 1,300,000 1,320,000 Common stock, $5 par 2,000,000 1,000,000 Additional paid-in capital 1,000,000 200,000 Retained earnings 20,000 2,420,000 Total Liabilities & Equities $5,320,000 $5,540,000

Prepare a consolidated balance sheet for Illinois Corporation immediately after the business combination.

Explanation / Answer

Balance sheet Before Combination , Jan 2.2013. Details Illinois Corp North DAkota Co Assets Amt $ Amt $ Cash                      150,000           240,000 Inventories                    320,000           800,000 Other Current Assets                    500,000        1,000,000 Total Current Assets                    970,000        2,040,000 Land                    350,000           500,000 PPE                4,000,000        3,000,000 Total Assets                5,320,000        5,540,000 Liabilities & Equities Liabilities Accounts Payable                1,000,000           600,000 Notes Payable                  1,300,000        1,320,000 Total Liabilities                2,300,000        1,920,000 Equities Common Stock $5par                2,000,000        1,000,000 APIC                  1,000,000           200,000 Retained Earning                        20,000        2,420,000 Total Liabilities & Equities                5,320,000        5,540,000 Net Assets Acquired          3,620,000 Value of shares Issued          3,800,000 Goodwill Recognized =           180,000 Consolidated Balance Sheet Illinois Corporation Details Amt   Assets Cash                      390,000 Inventories                1,120,000 Other Current Assets                1,500,000 Total Current Assets                3,010,000 Land                    850,000 PPE                7,000,000 Goodwill                    180,000 Total Assets              11,040,000 Liabilities & Equities Liabilities Accounts Payable                1,600,000 Notes Payable                  2,620,000 Total Liabilities                4,220,000 Equities Common Stock $5par                3,000,000 APIC                  3,800,000 Retained Earning                        20,000 Total Liabilities & Equities              11,040,000

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