The following book and fair value were available for Salt company as of March 1
ID: 2608666 • Letter: T
Question
The following book and fair value were available for Salt company as of March 1
Book value Fair value
Inventory 630,000 600,000
Land 750,000 990,000
Building 1,700,000 2,000,000
Customer Relationship - 800,000
Account Payable (80,000) (80,000)
Common stock (2,000,000)
Additional P-I-C (500,000)
Retained Earnings 1/1 (360,000)
Revenues (420,000)
Expenses 280,000
Pepper company pays $4,100,000 for all of Salt's common stock in a merger, after which Salt will cease to exist as a separate entity. Pepper pays $25,000 for legal fees to complete the transaction. REQUIRED: Prepare Pepper's journal entry to record its acquisition of Salt
Explanation / Answer
Answer
Date Particular Debit ($) Credit ($) 1 Inventory 600000 Land 990000 Building 2000000 Customer relationships 800000 To Capital Reseve/free reserve 210000 To Accounts Payable 80000 To Additional Paid in Capital 4100000 (To record assets and liabilities ) 2 Legal fees 25000 To Cash 25000 (To Record Payment of Legal Fees)Related Questions
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