50.1K

Verified Solution

Link Copied!

Question 2 (50 points). On January 1, 2021, Pluto Corporation acquired Sun Corporation's net assets by paying $190,000 cash. Balance sheet data for the Pluto & Sun and fair value information for Sun immediately before the business combination are given below: Pluto Book Value $105,000 225,000 190,000 375,000 -140,000 $755,000 Sun Book Value $60,000 60,500 52,500 175,000 45,000 $303,000 Fair Value $60,000 60,500 60,000 150,000 $330,500 ASSETS Cash Notes receivable Inventory Plant, Property and Equipment Less: Accumulated Depreciation Total Assets LIABILITIES & STOCKHOLDERS' EQUITY Accounts Payable Notes Payable Bonds payable Common Stock Additional Paid-in Capital Retained Earnings Total Liabilities and Equities $52,000 85,000 25,000 $155,000 235,000 100,000 30,000 100,000 135,000 $755,000 $52,000 85,000 25,000 40,000 35,000 66,000 $303,000 Required: a. Prepare the journal entry to record the acquisition of Sun Corporation (35 points). b. What would the balance of inventory be in the balanced sheet of combined company immediately after the combination? (5 points). c. What would the balance of accounts payable be in the balanced sheet of combined company immediately after the combination? (5 points). d. What would the balance of common stock be in the balanced sheet of combined company immediately after the combination? (5 points)

Answer & Explanation Solved by verified expert

See Answer