Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,200 shares of Pamrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows: Balance Sheet Items Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Total Assets Liabilities and Equities Accounts Payable Bonds Payable Common Stock: $20 par value $5 par value Additional Paid-In Capital Retained Earnings Total Liabilities and Equities $ S S S Pamrod Manufacturing Book Value Fair Value 88,000 103,000 200,000 59,000 610,000 (234,000) 826,000 54,000 305,000 194,000 35,000 238,000 826,000 $ $ $ 88,000 $ 103,000 393,000 91,000 557,000 1,232,000 $ 54,000 $ 315,000 $ Stafford Industries Book Value 24,000 52,000 110,000 $ 6,000 S 157,000 87,000 18,000 244,000 512,000 49,000 418,000 (141,000) 512,000 $ 594,000 Fair Value Pamrod shares were selling for $140 on the date of acquisition. Required: a. Prepare a Journal entry to record the acquisition in Pamrod's books. b. Prepare a balance sheet for the combined enterprise immediately following the business combination. 24,000 52,000 155,000 21,000 342,000 6,000 145,000

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Chapter1: Financial Statements And Business Decisions
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Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,200
shares of Pamrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as
follows:
Balance Sheet Items
Assets
Cash
Accounts Receivable
Inventory
Land
Buildings and Equipment
Less: Accumulated Depreciation
Total Assets
Liabilities and Equities
Accounts Payable
Bonds Payable
Common Stock:
$20 par value
$5 par value
Additional Paid-In Capital
Retained Earnings
Total Liabilities and Equities
S
S
$
S
Pamrod Manufacturing
Book Value
$
88,000
103,000
200,000
59,000
610,000
(234,000)
826,000 $
54,000 $
305,000
194,000
35,000
238,000
826,000
Fair Value
88,000 $
103,000
393,000
91,000
557,000
1,232,000 S
54,000 $
315,000
S
Stafford Industries
Book Value
24,000
52,000
110,000
49,000
418,000
(141,000)
512,000 S
$
6,000
157,000
87,000
18,000
244,000
512,000
S
Fair Value
Pamrod shares were selling for $140 on the date of acquisition.
Required:
a. Prepare a Journal entry to record the acquisition in Pamrod's books.
b. Prepare a balance sheet for the combined enterprise immediately following the business combination.
24,000
52,000
155,000
21,000
342,000
594,000
6,000
145,000
Transcribed Image Text:Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,200 shares of Pamrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows: Balance Sheet Items Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Total Assets Liabilities and Equities Accounts Payable Bonds Payable Common Stock: $20 par value $5 par value Additional Paid-In Capital Retained Earnings Total Liabilities and Equities S S $ S Pamrod Manufacturing Book Value $ 88,000 103,000 200,000 59,000 610,000 (234,000) 826,000 $ 54,000 $ 305,000 194,000 35,000 238,000 826,000 Fair Value 88,000 $ 103,000 393,000 91,000 557,000 1,232,000 S 54,000 $ 315,000 S Stafford Industries Book Value 24,000 52,000 110,000 49,000 418,000 (141,000) 512,000 S $ 6,000 157,000 87,000 18,000 244,000 512,000 S Fair Value Pamrod shares were selling for $140 on the date of acquisition. Required: a. Prepare a Journal entry to record the acquisition in Pamrod's books. b. Prepare a balance sheet for the combined enterprise immediately following the business combination. 24,000 52,000 155,000 21,000 342,000 594,000 6,000 145,000
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