Reference no: EM132940719
Question - The Logan Company is purchasing the Nylon Sail Company. The Nylon Sail Company's Balance Sheet information on June 30, 2020 is as follows:
Assets
Cash $43,600
Accounts Receivable 55,800
Inventories 141,000
Land 95,000
Building, net 368,000
Equipment, net 39,760
Patent 55,000
Trademark 5,000
Total Assets $803,160
Liabilities
Accounts Payable $77,440
Stockholders' Equity
Common Stock $600,000
Retained Earnings 125,720
Total Liabilities and Stockholder's Equity $803,160
Logan Company will pay $800,000 cash down, sign and issue a Note Payable to Nylon Sail Company in the amount of $500,000, and assume the Accounts Payable. All assets listed in the balance sheet will be acquired by Logan Company at their listed amounts, with the exception of the following assets which will be acquired at their agreed fair values as follows:
Inventories $175,300
Land $145,000
Building $502,000
Patent $85,000
Trademark $25,000
Required -
1. Prepare the journal entries on Logan Company's books to record the purchase.
2. Prepare the journal entry on Nylon Sail Company's books to record the sale.
3. Prepare list of the specific components of the gain for Nylon Sail Company.
4. Prepare the Balance Sheet for Nylon Sail Company as of June 30, 2020 immediately after the sale to Logan Company.