10.00 points Anchor Corporation paid cash of $175,000 to acquire Zink Company\'s

Question

10.00 points Anchor Corporation paid cash of $175,000 to acquire Zink Company's net assets on February 1, 20X3. The balance sheet data for the two companies and fair value information for Zink immediately before the business combination were: Corporation Zink Company Balance Sheet Item Book Value Book Value Fair Value Assets Cash Accounts Receivable Inventory Patents Buildings & Equipment Less: Accumulated Depreciation $ 259,000 20,000 20,000 32,000 40,000 50,000 310,000135,000 140,000 179,000 86,000 388,000 (186,000) 32,000 42,000 49,000 (196 .000) Total Assets $ 866,000$257.000 $277.000 Liabilities & Equities Accounts Payable Notes Payable Common Stock: $ 84,000$ 61,000 s 61,000 124.000124.000 2 150,000 193,000 159,000 $10 par value $8 par value Additional Paid-In Capital Retained Earnings 18.000 5.000 49,000 280,000 Total Liabilities & Equities s 866,000$257.000

Explanation / Answer

A. Journal entry at the time of acquisition of Zink -

     Cash A/c Dr.                 20000

    Account Rec A/c Dr.      32000

    Inventory A/c Dr.            40000

    Patents Dr.                   50000

    Building Dr.                   135000

   Goodwill Dr.                   83000

        To Account Payable                     61000

        To notes Payable                          124000

        To Purchase consideration A/c       175000

B. Combined Balance sheet of Anchor Corporation -

Liability Amount $ Asset Amount $ Account Payable 145000 Cash 104000 Notes Payable 274000 Account Rec 172000 Common Stock 352000 Inventory 219000 Retained Earnings 280000 Patents 136000 Building (Net) 337000 Goodwill 83000 Total 1051000 Total 1051000

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