Supernova Company had the following summarized balance sheet on December 31 of the current year:...
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Accounting
Supernova Company had the following summarized balance sheet on December 31 of the current year:
Assets
Accounts receivable
$ 350,000
Inventory
450,000
Property and plant (net)
600,000
Total
$1,400,000
Liabilities and Equity
Notes payable
$ 600,000
Common stock, $5 par
300,000
Paid-in capital in excess of par
400,000
Retained earnings
100,000
Total
$1,400,000
The fair value of the inventory and property and plant is $600,000 and $850,000, respectively.
Assume that Redstar Corporation exchanges 75,000 of its $3 par value shares of common stock, when the fair price is $20 per share, for 100% of the common stock of Supernova Company.
Required:
a.
What journal entries will Redstar Corporation record for the investment in Supernova and issuance of stock?
b.
Prepare a supporting value analysis and determination and distribution of excess schedule
c.
Prepare Redstar's elimination of equity and adjustment for determination and distribution enties for the acquisition of Supernova.
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