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University of Michigan Dearborn Homework 5 Winter 2018 ACC 357 Name Peppy Corp and Sonny, Inc. have entered into negotiations leading to a possible...

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1.Using the above data to create consolidated balance sheet working paper as of December 31, 2017.

2. linking to the work paper prepared in part 1, create a formal consolidated balance sheet as of December 31, 2017.

ACC 357 HW5 W18 v1-page-001.jpg

University of Michigan Dearborn Homework 5
Winter 2018 ACC 357
Name Peppy Corp and Sonny, Inc. have entered into negotiations leading to a possible business combination. As of December 31,
2017, Sonny, Inc. condensed balance sheet was as ibllows: Sonny, Inc.
Balance Sheet
As of December 31 2017 Assets _ Cash ' $ 375,000
Receivables (net) 1,125,000
Inventories 1,687,500
Prepayments 675,000
Noncurrent assets 3,375,000
Total assets $ 7,237,500 Liabilities and stockholders' equity Current payables $ 3,000,000
Capital stock; parvalue of' $ 20 1,000,000
Retained earnings 3,237,500
Total equities $ 7,237,500 . Sonny, Inc's inventory has a fair value of $2,092,500, its noncIIrent assets, net of depreciation, approximated $3,847,500, its
current payables were valued at $3,225,000. Initially, Pappy Corp offered to acquire all of Sonny, Inc's stock for $4,347,500. Howeyer, 25% of Sonny, Inc.'s stockholders objected, because they fielt that the pm‘chase price should reflect about $240,000 of goodwill
Ultimately, Peppy Corp acquired 75% of Sonny, Inc's outstanding stock for $100 per share. Afler the acquisition was completed on Dec 31, 2017, the filibwing balance sheet was prepared for Pappy Corp: Page 1 of 2

ACC 357 HW5 W18 v1-page-002.jpg

Pappy Corp
Balance Sheet
For the Year Ended December 31 2017 Assets Cash $ 937,500
Receivables (net) 1,500,000
Inventories 1,687,500
Prepayments 1,125,000
Investment in securities 3,750,000
Noncurrent assets 30,000,000
Total assets m Liabilities and stoc kholders' eguit! Current payables 15,000,000
Capital stock; par value of $ 15 7,500,000
Retained earnings 16,500,000
Total equities $ 39,000,000 _
Required: 1 Using the above data and Excel, prepare a consolidated balance sheet working paper as of December 31,
2017. Be sure all input datais in a separate part of the schedule so that the solution will change with
changes of the input. 2 By linking to the work paper prepared in part I, prepare a formal cousolidated balance sheet as of
December 31, 2017. Page 2 of 2

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