On December 31, 2019, Manama Corporation issued 90,000 shares of its no-par, no-stated-value common stock (current fair value $14 a share) for 36,000 shares of the outstanding $10 par common stock of Bahrain Company. The $100,000 out-of-pocket costs of the business combination paid by Manama on December 31, 2019, were allocable as follows: 45% to finders, legal, and accounting fees directly related to the business combination: 55% to the SEC registration statement for Manama’s common stock issued in the businesses combination. There was no contingent consideration.
Immediately prior to the business combination, separate balance sheets of the constituent companies were as follows:
MANAMA CORPORATION AND BAHRAIN COMPANY
Separate Balance Sheets (prior to business combination)
December 31, 2019
Manama Bahrain Assets
Cash $ 200,000 $ 100,000
Trade accounts receivable (net) 400,000 200,000
Buildings (net) 600,000 300,000
Land (net) 1,300,000 1,000,000
Total assets $ 2,500,000 $ 1,600,000
Liabilities and Stockholders’ Equity
Current liabilities $ 800,000 $ 400,000
Long-term debt 100,000
Common stock, no par or stated value 1,200,000
Common stock, $10 par 400,000
Retained earnings 500,000 700,000
Total liabilities and stockholder’s equity $ 2,500,000 $ 1,600,000
Current fair values of Bahrain’s identifiable net assets differed from their carrying amounts as follows:
|
Buildings |
$ 250,000 |
|
Land |
$ 1,300,000 |
Instructions:
Please help me, it is very important??.
journal entries in the books of manama corporation
1.cash a/c dr 100000$
trade receivables a/c dr 200000$
land a/c dr 1300000$
building a/c dr 250000$
Goodwill a/c dr 90000 $
To Current liabilites a/c 400000$
To Long term debt a/c 100000$
To Purchase consideration a/c 1260000$
( Being incorporation of assets in the books of manam ltd)
2.
Purchase consideration a/c dr 1260000$
To common stock a/c 1260000$
3. Profit and loss a/c dr 100000$
To expenses payable a/ c 100000$
Get Answers For Free
Most questions answered within 1 hours.