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On January 1, 2015, NewTune Company exchanges 15,000 shares of its common stock for all of...

On January 1, 2015, NewTune Company exchanges 15,000 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune’s shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go’s fair value. NewTune also paid $25,000 in stock registration and issuance costs in connection with the merger.

Several of On-the-Go’s accounts’ fair values differ from their book values on this date:

Book Values Fair Values
Receivables?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,000 $ 63,000
Trademarks?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000 225,000
Record music catalog??. . . . . . . . . . . . . . . . . . . . . . . . . 60,000 180,000
In-process research and development . . . . . . . . . . . . . –0– 200,000
Notes payable? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50,000) (45,000)

Precombination January 1, 2015, book values for the two companies are as follows:

NewTune On-the-Go
Cash? . . . . . . . . . . . . . . . . . . . . . . . . $     60,000 $   29,000
Receivables?? . . . . . . . . . . . . . . . . . . 150,000 65,000
Trademarks.? . . . . . . . . . . . . . . . . . . 400,000 95,000
Record music catalog . . . . . . . . . . . 840,000 60,000
Equipment (net). . . . . . . . . . . . . . . . 320,000 105,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . $ 1,770,000 $ 354,000
Accounts payable. . . . . . . . . . . . . . . $  (110,000) $  (34,000)
Notes payable. . . . . . . . . . . . . . . . . . (370,000) (50,000)
Common stock. .? . . . . . . . . . . . . . . . (400,000) (50,000)
Additional paid-in capital? . . . . . . . . (30,000) (30,000)
Retained earnings. . . . . . . . . . . . . . . (860,000) (190,000)
Totals . . . . . . . . . . . . . . . . . . . . . . . . $(1,770,000) $(354,000)

Prepare balance sheet for a statutory merger using the acquisition method.

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