Question

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

	Book Value			Fair Value
Inventory	$	350,000		$	298,250
Land		820,500			1,085,250
Buildings		2,040,000			2,361,000
Customer relationships		0			871,500
Accounts payable		(105,000	)		(105,000	)
Common stock		(2,000,000	)
Additional paid-in capital		(500,000	)
Retained earnings 1/1		(425,500	)
Revenues		(496,000	)
Expenses		316,000

Arturo Company pays $3,900,000 cash and issues 21,300 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $28,900 and Arturo pays $48,000 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.)

Journal entry worksheet

• Record the acquisition of Westmont Company.
• Record the legal fees related to the combination.
• Record the payment of stock issuance costs.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1

Answer 1