Reference no: EM131728301
Question - The financial statements for Leroy Inc. and Manser Corp., just prior to their combination, for the year ending December 31, 20X4, follow. Manser's buildings were undervalued on its financial records by $80,000.
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Leroy Inc.
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Manser Corp.
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Revenues
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$1,450,000
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$480,000
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Expenses
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(1,250,000)
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(260,000)
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Net income
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$200,000
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$220,000
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|
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Retained earnings, January 1, 20X4
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600,000
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450,000
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Net income (above)
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200,000
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220,000
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Dividends paid
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(100,000)
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(120,000)
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Retained earnings, December 31, 20X4
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$700,000
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$550,000
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Cash
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$150,000
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$110,000
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Receivables and inventory
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260,000
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280,000
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Buildings (net)
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680,000
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330,000
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Equipment (net)
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730,000
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490,000
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Total assets
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$1,820,000
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$1,210,000
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Liabilities
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$220,000
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$180,000
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Common stock
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790,000
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400,000
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Additional paid-in capital
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110,000
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80,000
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Retained earnings, December 31, 20X4 (above)
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700,000
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550,000
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Total liabilities and stockholders' equity
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$1,820,000
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$1,210,000
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On December 31, 20X4, Leroy issued 52,000 new shares of its $13 par value stock in exchange for all the outstanding shares of Manser. Leroy's shares had a fair value on that date of $39 per share. Leroy paid $35,000 to an investment bank for assisting in the arrangements. Leroy also paid $20,000 in stock issuance costs to effect the acquisition of Manser. Manser will retain its incorporation.
Required:
(1) Prepare the journal entry to record the issuance of common stock by Leroy.
(2) Prepare the journal entry to record the payment of combination costs.
(3) Determine consolidated net income for the year ended December 31, 20X4.
(4) Determine consolidated additional paid-in capital at December 31, 20X4.