Prepare the journal entry to record the exchange of stock

Reference no: EM13159841

On January 1, 2010, Peach Company issued 1,500 of its $20 par value common shares with a fair value of $60 per share in exchange for the 2,000 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,700, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows:

Peach Company Swartz Company
Cash $ 73,000 $ 13,000
Accounts receivable (net) 95,000 19,000
Inventory 58,000 25,000
Plant and equipment (net) 95,000 43,000
Land 26,000 22,000
Total assets $347,000 $122,000

Accounts payable $ 66,000 $ 18,000
Notes payable 82,000 21,000
Common stock, $20 par value 100,000 40,000
Other contributed capital 60,000 24,000
Retained earnings 39,000 19,000
Total equities $347,000 $122,000

Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.

A. Prepare the journal entry on Peach Company's books to record the exchange of stock.
B. Prepare a Computation and Allocation Schedule for the difference between book value and value implied by the purchase price.
C. Prepare a consolidated balance sheet at the date of acquisition.

Reference no: EM13159841

Questions Cloud

Determining status of insurance company : An insurance company issues a policy promising to pay $250,000 to the policyholder if the policyholder's house burns down during 2011. The policyholder accepts and pays the premium.

Example of permanently restricted resources : Provide examples of resources that are temporarily restricted as to: (a) purpose; (b) time; and (c) the occurrence of a specific event. Provide an example of permanently restricted resources.

Why would a country employ the use of a guest worker program : Why would a country employ the use of a guest worker program? Why would a country include offshore assembly provisions in its tariff code?

Explain the electron shifts resulting in the ring closure : the electron shifts resulting in the ring closure. draw diagrams of the products.

Prepare the journal entry to record the exchange of stock : Prepare the journal entry on Peach Company's books to record the exchange of stock. Prepare a consolidated balance sheet at the date of acquisition.

Describe how phagocytosis differs from endocytosis : Describe how phagocytosis differs from endocytosis and what generally happens to the internalized material.

Expected value approach : A consultant developed the following projections of net cash flow (in thousands of dollars) for a five year planning horizon. All costs including the consultants fee are included. a. What decision should Lake Placid make using the expected value ap..

How many sodium atoms would fit : If the diameter of a sodium atom is 3.14×10-8 cm, how many sodium atoms would fit along a line exactly 6.00 inch long?

What is the present worth of the cost : Cost of a part increases by 3$ every 6 months. If the cost for the first semiannual period is expected to be $85, what is the present worth of the cost for a 4-year time period at an interestrate of 1% per month?

User Account

All Pages