Manta company is about to purchase the net assets of Hounton Incorp. which has t
ID: 2482327 • Letter: M
Question
Manta company is about to purchase the net assets of Hounton Incorp. which has the following balance sheet:
Assets:
Accounts Recievable................40,000
Inventory...................................80,000
Equipment 90,000..............40,000
Accumulated(50,000)
Depreciation
Land & Building 300,000...........200,000
Accumulated (100,000)
Depreciation
Goodwill.....................................80,000
Total assets ..............................440,000
Liabilites & Stockholders Equity:
Bonds payable............................100,000
Common stock $10 par...............200,000
Paid in capital in excess to par....100,000
Retain earnings............................40,000
Total liabilities & equity.................440,000
Manta has secured the following market values for Hounton’s accounts
Inventory..................................120,000
Equipment ...............................60,000
Land & building........................240,000
Bonds payable .........................90,000
Record the entry for the purchase of the net assets of Hounton Inc. by Manta at the following cash prices:
a. $420,000 b. $50,000
Explanation / Answer
Net Assets of Hounton's Inc = 40,000 + 120,000 + 60,000 + 240,000 - 90,000 = $370,000
S.No. Accounts Titles and Explanation Debit Credit 1 Accounts Receivable $40,000.00 Inventory $120,000.00 Equipment $60,000.00 Land and Building $240,000.00 Goodwill $50,000.00 Bonds Payable $90,000.00 Cash $420,000.00 2 Accounts Receivable $40,000.00 Inventory $120,000.00 Equipment $60,000.00 Land and Building $240,000.00 Retained Earnings $320,000.00 Bonds Payable $90,000.00 Cash $50,000.00Related Questions
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