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Separate balance sheets of Pellman Corporation and Shire Company on May 31 20X1, together with fair values of Shire's identifiable net assets, is as follows: Pellman Corporation and Shire Company Separate Balance Sheets (prior to business combination) May 31, 20X1 Pellman Shire Shire Corporation Carry Value Fair Value Asserts $550,000 700,000 1,400,000 2,850,000 $5,500,000 $10,000 60,000 140,000 690,000 Cash Trade accounts Receivable (net) Inventories Plant Assets(net) Total Assets Liabilities and Stockholders Equity Current Liabilities Long Term Debt Common Stock $10 par Additional Paid in Capital Retained Earnings Total Liabilities and stockholders Equity $10,000 60,000 120,000 610,000 $800,000 $80,000 440,000 $500,000 1,000,000 1,500,000 1,200,000 1,300,000 $5,500,000 $80,000 400,000 100,000 40,000 180,000 $800,000 On May 31, 20X1, Pellman acquired all 10,000 shares if Shire's outstanding common stock by paying $300,000 cash to Shire's stockholders and $50,000 cash for finders and legal fees related to the business combination. Instructions: a. Prepare journal entries for Pellman to record the business combination with Shire on May 31, 20X1. b. Prepare the working paper for the consolidated balance sheet of Pellman Corporation and subsidiary on May 31, 20X1.

Separate balance sheets of Pellman Corporation and Shire Company on May 31 20X1, together with fair values of Shire's identifiable net assets, is as follows: Pellman Corporation and Shire Company Separate Balance Sheets (prior to business combination) May 31, 20X1 Pellman Shire Shire Corporation Carry Value Fair Value Asserts $550,000 700,000 1,400,000 2,850,000 $5,500,000 $10,000 60,000 140,000 690,000 Cash Trade accounts Receivable (net) Inventories Plant Assets(net) Total Assets Liabilities and Stockholders Equity Current Liabilities Long Term Debt Common Stock $10 par Additional Paid in Capital Retained Earnings Total Liabilities and stockholders Equity $10,000 60,000 120,000 610,000 $800,000 $80,000 440,000 $500,000 1,000,000 1,500,000 1,200,000 1,300,000 $5,500,000 $80,000 400,000 100,000 40,000 180,000 $800,000 On May 31, 20X1, Pellman acquired all 10,000 shares if Shire's outstanding common stock by paying $300,000 cash to Shire's stockholders and $50,000 cash for finders and legal fees related to the business combination. Instructions: a. Prepare journal entries for Pellman to record the business combination with Shire on May 31, 20X1. b. Prepare the working paper for the consolidated balance sheet of Pellman Corporation and subsidiary on May 31, 20X1.

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 98.3C
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Separate balance sheets of Pellman Corporation and Shire Company on May 31 20X1, together with fair values of Shire's identifiable net assets, is as follows: Pellman Corporation and Shire Company Separate Balance Sheets (prior to business combination) May 31, 20X1 Pellman Shire Shire Fair Value Corporation Carry Value Asserts $550,000 700,000 1,400,000 $10,000 60,000 140,000 Cash Trade accounts Receivable (net) Inventories Plant Assets(net) Total Assets Liabilities and Stockholders Equity Current Liabilities Long Term Debt Common Stock $10 par Additional Paid in Capital Retained Earnings Total Liabilities and stockholders Equity $10,000 60,000 120,000 2,850,000 $5,500,000 610,000 $800,000 690,000 $500,000 1,000,000 1,500,000 1,200,000 1,300,000 $5,500,000 $80,000 400,000 100,000 40,000 $80,000 440,000 180,000 $800,000 On May 31, 20X1, Pellman acquired all 10,000 shares if Shire's outstanding common stock by paying $300,000 cash to Shire's stockholders and $50,000 cash for finders and legal fees related to the business combination. Instructions: a. Prepare journal entries for Pellman to record the business combination with Shire on May 31, 20X1. b. Prepare the working paper for the consolidated balance sheet of Pellman Corporation and subsidiary on May 31, 20X1.
Transcribed Image Text:Separate balance sheets of Pellman Corporation and Shire Company on May 31 20X1, together with fair values of Shire's identifiable net assets, is as follows: Pellman Corporation and Shire Company Separate Balance Sheets (prior to business combination) May 31, 20X1 Pellman Shire Shire Fair Value Corporation Carry Value Asserts $550,000 700,000 1,400,000 $10,000 60,000 140,000 Cash Trade accounts Receivable (net) Inventories Plant Assets(net) Total Assets Liabilities and Stockholders Equity Current Liabilities Long Term Debt Common Stock $10 par Additional Paid in Capital Retained Earnings Total Liabilities and stockholders Equity $10,000 60,000 120,000 2,850,000 $5,500,000 610,000 $800,000 690,000 $500,000 1,000,000 1,500,000 1,200,000 1,300,000 $5,500,000 $80,000 400,000 100,000 40,000 $80,000 440,000 180,000 $800,000 On May 31, 20X1, Pellman acquired all 10,000 shares if Shire's outstanding common stock by paying $300,000 cash to Shire's stockholders and $50,000 cash for finders and legal fees related to the business combination. Instructions: a. Prepare journal entries for Pellman to record the business combination with Shire on May 31, 20X1. b. Prepare the working paper for the consolidated balance sheet of Pellman Corporation and subsidiary on May 31, 20X1.
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