The following book and fair values were available for WestmontCompany as of March 1.Book...The...

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Accounting

The following book and fair values were available for WestmontCompany as of March 1.
Book Value Fair Value
  Inventory $ 300,000 $ 248,250
  Land 816,000 1,085,250
  Buildings 2,050,000 2,375,500
  Customer relationships 0 822,750
  Accounts payable (100,000 ) (100,000 )
  Common stock (2,000,000 )
  Additional paid-in capital (500,000 )
  Retained earnings 1/1 (395,000 )
  Revenues (454,500 )
  Expenses 283,500
Arturo Company pays $3,470,000 cash and issues 24,300 shares ofits $2 par value common stock (fair value of $50 per share) for allof Westmont’s common stock in a merger, after which Westmont willcease to exist as a separate entity. Stock issue costs amount to$25,800 and Arturo pays $47,400 for legal fees to complete thetransaction.
Prepare Arturo’s journal entry to record its acquisition ofWestmont. (If no entry is required for a transaction/event,select "No journal entry required" in the first accountfield.)

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3.9 Ratings (746 Votes)

Account Titles and Explanation	Debit	Credit
Inventory	248250
Land	1085250
Buildings	2375500
Customer Relationships	822750
Goodwill	253250
Accounts payable		100000
Common Stock		48600	=24300*2
Additional Paid-In Capital		1166400	=24300*(50-2)
Cash		3470000

Account Titles and Explanation	Debit	Credit
Professional Services Expense	47400
Cash		47400

To record legal fees related to the combination.

Account Titles and Explanation	Debit	Credit
Additional Paid-In Capital	25800
Cash		25800

To record payment of stock issuance costs.

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In: AccountingThe following book and fair values were available for WestmontCompany as of March 1.Book...The following book and fair values were available for WestmontCompany as of March 1.Book ValueFair Value Inventory$300,000$248,250 Land816,0001,085,250 Buildings2,050,0002,375,500 Customer relationships0822,750 Accounts payable(100,000)(100,000) Common stock(2,000,000) Additional paid-in capital(500,000) Retained earnings 1/1(395,000) Revenues(454,500) Expenses283,500Arturo Company pays $3,470,000 cash and issues 24,300 shares ofits $2 par value common stock (fair value of $50 per share) for allof Westmont’s common stock in a merger, after which Westmont willcease to exist as a separate entity. Stock issue costs amount to$25,800 and Arturo pays $47,400 for legal fees to complete thetransaction.Prepare Arturo’s journal entry to record its acquisition ofWestmont. (If no entry is required for a transaction/event,select "No journal entry required" in the first accountfield.)

	Book Value			Fair Value
Inventory	$	300,000		$	248,250
Land		816,000			1,085,250
Buildings		2,050,000			2,375,500
Customer relationships		0			822,750
Accounts payable		(100,000	)		(100,000	)
Common stock		(2,000,000	)
Additional paid-in capital		(500,000	)
Retained earnings 1/1		(395,000	)
Revenues		(454,500	)
Expenses		283,500