Prepare the journal entry to record the issuance

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Question 1. ) The financial statements for Jobe Inc. and Lake Corp., just prior to their combination, for the year ending December 31, 20X2, follow. Lake's buildings were undervalued on its financial records by $60,000.
Jobe Inc. Lake Corp. 
Revenues $1,300,000 $500,000 
Expenses (1,180,000) (290,000) 
Net income $120,000 $210,000 

Retained earnings, January 1, 20X2 700,000 500,000 
Net income (above) 120,000 210,000 
Dividends paid (110,000) (110,000) 
Retained earnings, December 31, 20X2 $710,000 $600,000 

Cash $160,000 $120,000 
Receivables and inventory 240,000 240,000 
Buildings (net) 700,000 350,000 
Equipment (net) 700,000 600,000 
Total assets $1,800,000 $1,310,000 

Liabilities $250,000 $195,000 
Common stock 750,000 430,000 
Additional paid-in capital 90,000 85,000 
Retained earnings, December 31, 20X2 (above) 710,000 600,000 
Total liabilities and stockholders' equity $1,800,000 $1,310,000 


On December 31, 20X2, Jobe issued 54,000 new shares of its $10 par value stock in exchange for all the outstanding shares of Lake. Jobe's shares had a fair value on that date of $35 per share. Jobe paid $34,000 to an investment bank for assisting in the arrangements. Jobe also paid $24,000 in stock issuance costs to effect the acquisition of Lake. Lake will retain its incorporation.

-1) Prepare the journal entry to record the issuance of common stock by Jobe.
-2) Prepare the journal entry to record the payment of combination costs.
-3) Determine consolidated net income for the year ended December 31, 20x2.
-4) Determine consolidated additional paid-in capital at December 31, 20x2. (

Question 2) The financial statements for Metzger Inc. and Ortiz Corp., just prior to their combination, for the year ending December 31, 20X2, follow. Ortiz's buildings were undervalued on its financial records by $80,000.

Metzger Inc. Ortiz Corp. 
Revenues $1,800,000 $700,000 
Expenses (1,580,000) (590,000) 
Net income $220,000 $110,000 

Retained earnings, January 1, 2012 800,000 600,000 
Net income (above) 220,000 110,000 
Dividends paid (130,000) (80,000) 
Retained earnings, December 31, 2012 $890,000 $630,000 

Cash $240,000 $160,000 
Receivables and inventory 270,000 260,000 
Buildings (net) 850,000 500,000 
Equipment (net) 800,000 490,000 
Total assets $2,160,000 $1,410,000 

Liabilities $310,000 $155,000 
Common stock 850,000 530,000 
Additional paid-in capital 110,000 95,000 
Retained earnings, December 31, 20X2 (above) 890,000 630,000 
Total liabilities and stockholders' equity $2,160,000 $1,410,000 



On December 31, 20X2, Metzger issued 58,000 new shares of its $10 par value stock in exchange for all the outstanding shares of Ortiz. Metzger's shares had a fair value on that date of $40 per share. Metzger paid $38,000 to an investment bank for assisting in the arrangements. Metzger also paid $28,000 in stock issuance costs to effect the acquisition of Ortiz. Ortiz will retain its incorporation.

-1) Prepare the journal entry to record the issuance of common stock by Metzger.
-2) Prepare the journal entry to record the payment of combination costs.
-3) Determine consolidated net income for the year ended December 31, 20X2.
-4) Determine consolidated additional paid-in capital at December 31, 20X2. (Points : 14) 

Question 3) The financial statements for Metzger Inc. and Ortiz Corp., just prior to their combination, for the year ending December 31, 20X2, follow. Ortiz's buildings were undervalued on its financial records by $80,000.

Metzger Inc. Ortiz Corp. 
Revenues $1,800,000 $700,000 
Expenses (1,580,000) (590,000) 
Net income $220,000 $110,000 

Retained earnings, January 1, 2012 800,000 600,000 
Net income (above) 220,000 110,000 
Dividends paid (130,000) (80,000) 
Retained earnings, December 31, 2012 $890,000 $630,000 

Cash $240,000 $160,000 
Receivables and inventory 270,000 260,000 
Buildings (net) 850,000 500,000 
Equipment (net) 800,000 490,000 
Total assets $2,160,000 $1,410,000 

Liabilities $310,000 $155,000 
Common stock 850,000 530,000 
Additional paid-in capital 110,000 95,000 
Retained earnings, December 31, 20X2 (above) 890,000 630,000 
Total liabilities and stockholders' equity $2,160,000 $1,410,000 



On December 31, 20X2, Metzger issued 58,000 new shares of its $10 par value stock in exchange for all the outstanding shares of Ortiz. Metzger's shares had a fair value on that date of $40 per share. Metzger paid $38,000 to an investment bank for assisting in the arrangements. Metzger also paid $28,000 in stock issuance costs to effect the acquisition of Ortiz. Ortiz will retain its incorporation.

-1) Prepare the journal entry to record the issuance of common stock by Metzger.
-2) Prepare the journal entry to record the payment of combination costs.
-3) Determine consolidated net income for the year ended December 31, 20X2.
-4) Determine consolidated additional paid-in capital at December 31, 20X2.

Reference no: EM13228527

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