Pleasantville Company had the following balance sheet on January 1. Pleasantville Company Balance Sheet January 1 1 Cash $175,000.00 Accounts Payable $57,000.00 2 Inventory 157,000.00 Notes Payable 250,000.00 3 Property, Plant, and Equipment 200,000.00 Mortgage Payable 150,000.00 4 Patent 25,000.00 Retained Earnings 100,000.00 5 $557,000.00 $557,000.00 On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of its outstanding shares for $575,000 in cash. On that date in time, the fair value of their inventory was $150,000, and the fair value of the equipment was $225,000. The book value equals the fair value for all other accounts listed. Required: 1. Compute the goodwill associated with the purchase of Pleasantville. 2. Prepare the journal entry necessary at January 2, to record the acquisition of Pleasantville.
Pleasantville Company had the following balance sheet on January 1. Pleasantville Company Balance Sheet January 1 1 Cash $175,000.00 Accounts Payable $57,000.00 2 Inventory 157,000.00 Notes Payable 250,000.00 3 Property, Plant, and Equipment 200,000.00 Mortgage Payable 150,000.00 4 Patent 25,000.00 Retained Earnings 100,000.00 5 $557,000.00 $557,000.00 On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of its outstanding shares for $575,000 in cash. On that date in time, the fair value of their inventory was $150,000, and the fair value of the equipment was $225,000. The book value equals the fair value for all other accounts listed. Required: 1. Compute the goodwill associated with the purchase of Pleasantville. 2. Prepare the journal entry necessary at January 2, to record the acquisition of Pleasantville.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter5: Accounting For Retail Businesses
Section: Chapter Questions
Problem 5PA: Multiple-step income statement and balance sheet The following selected accounts and their current...
Related questions
Question
Pleasantville Company had the following balance sheet on January 1.
|
Pleasantville Company
|
|
Balance Sheet
|
|
January 1
|
|
1
|
Cash
|
$175,000.00
|
Accounts Payable
|
$57,000.00
|
|
2
|
Inventory
|
157,000.00
|
Notes Payable
|
250,000.00
|
|
3
|
Property, Plant, and Equipment
|
200,000.00
|
Mortgage Payable
|
150,000.00
|
|
4
|
Patent
|
25,000.00
|
|
100,000.00
|
|
5
|
|
$557,000.00
|
|
$557,000.00
|
On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of its outstanding shares for $575,000 in cash. On that date in time, the fair value of their inventory was $150,000, and the fair value of the equipment was $225,000. The book value equals the fair value for all other accounts listed.
Required:
| 1. | Compute the |
| 2. | Prepare the |
Pleasantville Company had the following balance sheet on January 1.
|
Pleasantville Company
|
|
Balance Sheet
|
|
January 1
|
|
1
|
Cash
|
$175,000.00
|
Accounts Payable
|
$57,000.00
|
|
2
|
Inventory
|
157,000.00
|
Notes Payable
|
250,000.00
|
|
3
|
Property, Plant, and Equipment
|
200,000.00
|
Mortgage Payable
|
150,000.00
|
|
4
|
Patent
|
25,000.00
|
Retained Earnings
|
100,000.00
|
|
5
|
|
$557,000.00
|
|
$557,000.00
|
On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of its outstanding shares for $575,000 in cash. On that date in time, the fair value of their inventory was $150,000, and the fair value of the equipment was $225,000. The book value equals the fair value for all other accounts listed.
Required:
| 1. | Compute the goodwill associated with the purchase of Pleasantville. |
| 2. | Prepare the journal entry necessary at January 2, to record the acquisition of Pleasantville. |
X
Goodwill
1. Compute the goodwill associated with the purchase of Pleasantville.
2. Prepare the journal entry necessary at January 2, to record the acquisition of Pleasantville.
General Journal Instructions
PAGE 1
GENERAL JOURNAL
| DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
|---|---|---|---|---|---|
|
1
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
9
|
|
|
|
|
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Corporate Financial Accounting
Accounting
ISBN:
9781305653535
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Corporate Financial Accounting
Accounting
ISBN:
9781305653535
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning