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On January 1, NewTune Company exchanges 17,360 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTunes shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Gos fair value. NewTune also paid $44,650 in stock registration and issuance costs in connection with the merger.

Several of On-the-Gos accounts fair values differ from their book values on this date (credit balances in parentheses):

On January 1, NewTune Company exchanges 17,360 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTunes shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Gos fair value. NewTune also paid $44,650 in stock registration and issuance costs in connection with the merger. Several of On-the-Gos accounts fair values differ from their book values on this date (credit balances in parentheses): Book Values Fair Values Receivables $ 44,250 $ 41,300 Trademarks 117,250 277,750 Record music catalog 66,000 186,750 In-process research and development 0 261,000 Notes payable (54,750) (48,350) Precombination book values for the two companies are as follows: NewTune On-the-Go Cash $ 62,000 $ 50,250 Receivables 125,000 44,250 Trademarks 441,000 117,250 Record music catalog 873,000 66,000 Equipment (net) 344,000 108,000 Total Assets $ 1,845,000 $ 385,750 Accounts payable $ (150,000) $ (43,500) Notes payable (378,000) (54,750) Common stock (400,000) (50,000) Additional paid-in capital (30,000) (30,000) Retained earnings (887,000) (207,500) Total liabilities and equities $ (1,845,000) $ (385,750) Assume that this combination is a statutory merger so that On-the-Gos accounts will be transferred to the records of NewTune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a post combination balance sheet for NewTune as of the acquisition date. Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date

Precombination book values for the two companies are as follows:

	NewTune			On-the-Go
Cash	$	62,000		$	50,250
Receivables		125,000			44,250
Trademarks		441,000			117,250
Record music catalog		873,000			66,000
Equipment (net)		344,000			108,000
Total Assets	$	1,845,000		$	385,750
Accounts payable	$	(150,000)		$	(43,500)
Notes payable		(378,000)			(54,750)
Common stock		(400,000)			(50,000)
Additional paid-in capital		(30,000)			(30,000)
Retained earnings		(887,000)			(207,500)
Total liabilities and equities	$	(1,845,000)		$	(385,750)

1. Assume that this combination is a statutory merger so that On-the-Gos accounts will be transferred to the records of NewTune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a potcombination balance sheet for NewTune as of the acquisition date.
2. Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date.

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