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intermediate accounting questions

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Question;roblem 1-5 (LO 4, 7) Revaluation of assets. Jansen Company is a corporation that wasorganized on July 1, 20X1. The June 30, 20X6 balance sheet for Jansen is as follows:AssetsInvestments..................................... $ 400,500Accounts receivable................................ $1,250,000Allowance for doubtful accounts........................ (300,000) 950,000Inventory....................................... 1,500,000Prepaid insurance................................. 18,000Land......................................... 58,000Machinery and equipment (net)........................ 1,473,500Goodwill....................................... 100,000Total assets.................................... $4,500,000Liabilities and EquityCurrent liabilities.................................. $1,475,000Common stock, $10 par............................. 1,200,000Retained earnings................................. 1,825,000Total liabilities and equity........................... $4,500,000(continued)Business Combinations 59Machinery was purchased in fiscal years 20X2, 20X4, and 20X5 for $500,000, $850,000, and$660,000, respectively. The straight-line method of depreciation and a 10-year estimated life withno salvage value have been used for all machinery, with a half-year of depreciation taken in theyear of acquisition. The experience of other companies over the last several years indicates that themachinery can be sold at 125% of its book value.An analysis of the accounts receivable indicates that the allowance for doubtful accounts shouldbe increased to $337,500. An independent appraisal made in June 20X1 valued the land at $70,000.Using the lower-of-cost-or-market rule, inventory is to be restated at $1,200,000.To be exchanged are 16,000 shares of Clark Corporation for 120,000 Jansen shares. DuringJune 20X6, the fair value of a share of Clark Corporation was $265. The stockholders? equity accountbalances of Clark Corporation as of June 30, 20X6, were as follows:Common stock, $10 par........................................ $2,000,000Additional paid-in capital........................................ 580,000Retained earnings............................................. 2,496,400Total stockholders? equity........................................ $5,076,400Direct acquisition costs are $12,000.Assuming the books of Clark Corporation are to be retained, prepare the necessary journal entry(or entries) to effect the business combination on July 1, 20X6, as a purchase. Use zone analysisto support the purchase entries.Problem 1-6 (LO 7) Cash purchase, several of each priority, with goodwill. TweedyCorporation is contemplating the purchase of the net assets of Sylvester Corporation in anticipationof expanding its operations. The balance sheet of Sylvester Corporation on December 31,20X1, is as follows:1-60 Part 1 COMBINED CORPORATE ENTITIES AND CONSOLIDATIONSRequired _ _ _ _ _Sylvester CorporationBalance SheetDecember 31, 20X1Current assets: Current liabilities:Notes receivable............ $ 24,000 Accounts payable........... $ 45,000Accounts receivable.......... 56,000 Payroll and benefit-relatedInventory................. 31,000 liabilities............... 12,500Other current assets.......... 18,000 Debt maturing in one year..... 10,000Total current assets......... $129,000 Total current liabilities....... $ 67,500Investments............... 65,000Fixed assets: Other liabilities:Land................... $ 32,000 Long-term debt............. $248,000Building................. 245,000 Payroll and benefit-relatedEquipment................ 387,000 liabilities............... 156,000Total fixed assets.......... 664,000 Total other liabilities........ 404,000Intangibles: Stockholders? equity:Goodwill................. $ 45,000 Common stock............. $100,000Patents.................. 23,000 Paid-in capital in excess of par.. 250,000Trade names.............. 10,000 Retained earnings........... 114,500Total intangibles........... 78,000 Total equity............. 464,500Total assets............... $936,000 Total liabilities and equity...... $936,00060 Business CombinationsAn appraiser for Tweedy determined the fair values of the assets and liabilities to be as follows:Assets LiabilitiesNotes receivable............ $ 24,000 Accounts payable........... $ 45,000Accounts receivable.......... 56,000 Payroll and benefit-relatedInventory................. 30,000 liabilities................ 12,500Other current assets.......... 15,000 Debt maturing in one year...... 10,000Investments............... 63,000Land................... 55,000 Long-term debt.............. 248,000Building................. 275,000 Payroll and benefit-relatedEquipment................ 426,000 liabilities?long-term......... 156,000Goodwill................. ?Patents.................. 20,000Trade names.............. 15,000The agreed-upon purchase price was $580,000 in cash. Direct acquisition costs paid in cash totaled$20,000.Using the above information, do zone analysis, and prepare the entry on the books of TweedyCorporation to purchase the net assets of Sylvester Corporation on December 31, 20X1.

 

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