70.2K

Verified Solution

Link Copied!

P1-3 Journal entries and balance sheet for an acquisition On January 2, 2016, Pam Corporation issues its own $10 par common stock for all the outstanding stock of Sun Corporation in an acquisition. Sun is dissolved. In addition, Pam pays $40,000 for reg- istering and issuing securities and $60,000 for other costs of combination. The market price of Pam's stock on January 2, 2016, is $60 per share. Relevant balance sheet information for Pam and Sun Corporations on December 31, 2015, just before the combination, is as follows (in thousands) Pam Historical Cost Sun Historical Cost Sun Fair Value $20 120 $240 Cash $20 Inventories 100 60 Other current assets Land 200 180 200 160 40 200 400 $700 $100 Plant and equipment-net Total assets 1,300 $2,000 $ 400 700 $1,240 $100 Liabilities Capital stock, $10 par Additional paid-in capital Retained earnings Total liabilities and owners' equity 1,000 200 400 100 200 300 $700 $2,000 REQUIRED 1. Assume that Pam issues 25,000 shares of its stock for all of Sun's outstanding shares a. Prepare journal entries to record the acquisition of Sun. b. Prepare a balance sheet for Pam Corporation immediately after the acquisition. 2. Assume that Pam issues 15,000 shares of its stock for all of Sun's outstanding shares a. Prepare journal entries to record the acquisition of Sun. b. Prepare a balance sheet for Pam Corporation immediately after the acquisition

Answer & Explanation Solved by verified expert

See Answer