Exercise 2: Stock Purchase of Another Company
ChubbyGuy Inc. wants to purchase the outstanding stock of SkinnyGirl Inc. for purposes of horizontal
consolidation and will pay $800,000 cash for it plus indirect acquisition costs of $50,000. The
balance sheet for SkinnyGirl Inc. on the date of purchase is as follows:
Skinny Girl Inc.
Balance Sheet as of 7/31/17
Liabilities & Owners' Equity
Net Fixed Assets
Total Liabilities & O.E.:
A) Prepare the journal entry amounts for this stock purchase on the books of ChubbyGuy Inc. by entering the proper
dollar amounts in the gray-shaded cells. When correct, the cells will change color.