Exercise 3-8 Peep Inc. acquired 100% of the outstanding common stock of Shy Inc.

Question

Exercise 3-8 Peep Inc. acquired 100% of the outstanding common stock of Shy Inc. for $2,262,400 cash and 14,060 shares of its common stock ($2 par value). The stock's market value was $39 on the acquisition date Prepare the journal entry to record the acquisition. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit

Explanation / Answer

SOLUTION

Journal Entry to record the acquisition-

Account titles and Explanations Debit ($) Credit ($) Investment in Shy Inc. [$2,262,400 + (14,060 * $39)] 2,810,740 Cash 2,262,400 Common Stock (14,060 *$2) 28,120 Other Contributed Capital [14,060 * ($39 - $2)] 520,220

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