Prepare journal entries record the business combination

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Reference no: EM131192206

Journal Entries to Record a Business Combination

On January 1, 20X2, Frost Company acquired all of TKK Corporation's assets and liabilities by issuing 24,000 shares of its $4 par value common stock. At that date, Frost shares were selling at $22 per share. Historical cost and fair value balance sheet data for TKK at the time of acquisition were as follows:

Balance Sheet Item	Historical Cost	Fair Value
Cash & Receivables	$ 28,000	$ 28,000
Inventory	94,000	122,000
Buildings & Equipment	600,000	470,000
Less: Accumulated Depreciation	(240,000)
Total Assets	$ 482,000	$620,000
Accounts Payable	$ 41,000	$ 41,000
Notes Payable	65,000	63,000
Common Stock ($10 par value)	160,000
Retained Earnings	216,000
Total Liabilities & Equities	$ 482,000

Frost paid legal fees for the transfer of assets and liabilities of $14,000. Frost also paid audit fees of $21,000 and listing application fees of $7,000, both related to the issuance of new shares.

Required

Prepare the journal entries made by Frost to record the business combination.

Reference no: EM131192206

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