At December 31, 2020, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the outstanding shares of the Sophie Company. In addition, Pandora paid $10,000 in stock issue costs, $40,000 in legal fees. Summarized balance sheet and fair value information for Sophie immediately prior to the acquisition follows. | Book Value $100,000 280,000 520,000 750,000 Fair Value $100,000 250,000 640,000 870,000 500,000 Cash Accounts Receivable Inventory Buildings and Equipment (net) Trademarks and Tradenames $1.650,000 $200,000 Total Assets Accounts Payable Notes Payable Retained Earnings Total Liabilities and Equity $190,000 900,000 900,000 550,000 $1,650,000 Required: Prepare Pandora's general journal entry for the acquisition of Sophie assuming that Pandora's stock was trading at $30 at the date of acquisition and Sophie dissolves as a separate legal entity.
At December 31, 2020, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the outstanding shares of the Sophie Company. In addition, Pandora paid $10,000 in stock issue costs, $40,000 in legal fees. Summarized balance sheet and fair value information for Sophie immediately prior to the acquisition follows. | Book Value $100,000 280,000 520,000 750,000 Fair Value $100,000 250,000 640,000 870,000 500,000 Cash Accounts Receivable Inventory Buildings and Equipment (net) Trademarks and Tradenames $1.650,000 $200,000 Total Assets Accounts Payable Notes Payable Retained Earnings Total Liabilities and Equity $190,000 900,000 900,000 550,000 $1,650,000 Required: Prepare Pandora's general journal entry for the acquisition of Sophie assuming that Pandora's stock was trading at $30 at the date of acquisition and Sophie dissolves as a separate legal entity.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 10MC
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Transcribed Image Text:At December 31, 2020, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the
outstanding shares of the Sophie Company. In addition, Pandora paid $10,000 in stock issue costs, $40,000 in
legal fees.
Summarized balance sheet and fair value information for Sophie immediately prior to the acquisition follows.
Book Value
$100,000
280,000
520,000
750,000
Fair Value
$100,000
250,000
640,000
870,000
500,000
Cash
Accounts Receivable
Inventory
Buildings and Equipment (net)
Trademarks and Tradenames
Total Assets
Accounts Payable
Notes Payable
Retained Earnings
Total Liabilities and Equity
$1650,000
$200,000
900,000
550,000
$1650,000
$190,000
900,000
Required:
Prepare Pandora's general journal entry for the acquisition of Sophie assuming that Pandora's stock was trading
at $30 at the date of acquisition and Sophie dissolves as a separate legal entity.
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