Exercise 2 stock purchase of another company

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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 Assets Liabilities & Owners' Equity Book Value Book Value Cash $0 $0 A/P $30,000 $30,000 A/R 125,000 100,000 Notes Payable 75,000 75,000 Inventory 75,000 50,000 Bonds Payable 15,000 10,000 Net Fixed Assets 300,000 350,000 Total Liabilities: $120,000 Land 25,000 200,000 Trademark 15,000 10,000 Common Stock 75,000 Retained Earnings 345,000 Total Equity: $420,000 Total Assets: $540,000 Total Liabilities & O.E.: $540,000 Fair Market Value Fair Market Value 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.
Exercise 3: Initial Consolidation as of Date of Acquisition CheapBeer Inc. purchased 100% of the outstanding stock of FancyBrew Inc. for purposes of horizontal consolidation and paid $500,000 cash for the stock. The balance sheets for the two companies immediately after the acquisition are as follows: FancyBrew Inc. CheapBeer Inc. Balance Sheet as of 5/15/17 Balance Sheet as of 5/15/17 Assets Liabilities & Owners' Equity Assets Liabilities & Owners' Equity Book Value Book Value Book Value Book Value Cash

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