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Prepare the December entry for Ayayai Corporation

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Reference no: EM132636902

Question - On July 1, 2020, Ayayai Corporation purchased Young Company by paying $257,800 cash and issuing a $139,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.

Cash $51,600 Accounts payable $207,000

Accounts receivable 89,700 Stockholders' equity 238,700

Inventory 106,000 $445,700

Land 40,600

Buildings (net) 75,600

Equipment (net) 71,000

Trademarks 11,200

$445,700

The recorded amounts all approximate current values except for land (fair value of $64,500), inventory (fair value of $125,100), and trademarks (fair value of $15,120).

Required -

(a) Prepare the July 1 entry for Ayayai Corporation to record the purchase.

(b) Prepare the December 31 entry for Ayayai Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $3,920.

Reference no: EM132636902

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