Question

The following book and fair values were available for Westmont Company as of March 1.

	Book Value			Fair Value
Inventory	$	200,500		$	167,000
Land		817,500			1,097,250
Buildings		2,175,000			2,506,500
Customer relationships		0			860,250
Accounts payable		(87,000	)		(87,000	)
Common stock		(2,000,000	)
Additional paid-in capital		(500,000	)
Retained earnings 1/1		(431,500	)
Revenues		(478,500	)
Expenses		304,000

Arturo pays cash of $4,424,000 to acquire Westmont. No stock is issued and Arturo pays $49,300 for legal fees to complete the transaction.

Prepare Arturo’s journal entry to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1) Record the acquisition of Westmont Company

2) Record the legal fees related to the combination

Answer 1

Date	Account Titles and Explanation	Debit ( in $)	Credit( in $)
1	Inventory	$ 167,000
	Land	$ 1,097,250
	Buildings	$ 2,506,500
	Customer relationships	$ 860,250
	Accounts Payable		$ 87,000
	Cash		$ 4,424,000
	Gain on bargain purchase   - Bal. Fig.		$ 120,000
	(To record the acquisition of Westmont Company )
2	Professional Services Expense	$ 49,300
	Cash		$ 49,300
	(To record the legal fees related to the combination )