Question

On December 31, 2019, Manama Corporation issued 90,000 shares of its no-par, no-stated-value common stock (current...

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:

  1. Prepare journal entries for Manama Corporation on December 31, 2017, to record the business combination with Bahrain Company. (6 marks).

Please help me, it is very important??.

Homework Answers

Answer #1

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$

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
December 31, 2020 December 31, 2019 Current assets $124,400 $100,000 Plant assets (net) 394,272 333,000 Current...
December 31, 2020 December 31, 2019 Current assets $124,400 $100,000 Plant assets (net) 394,272 333,000 Current liabilities 85,994 73,000 Long-term liabilities 132,675 87,000 Common stock, $1 par 166,750 115,000 Retained earnings 133,253 158,000 Prepare a schedule showing a horizontal analysis for 2020, using 2019 as the base year. (Enter negative amounts and percentages using either a negative sign preceding the number e.g. -45, -45% or parentheses e.g. (45), (45%). Round percentages to 1 decimal place, e.g. 12.3%.) GLITTER INC. Condensed...
On January 1, 2019, Roxy Corp. issued shares of its common stock to acquire all of...
On January 1, 2019, Roxy Corp. issued shares of its common stock to acquire all of the outstanding common stock of Westwood Inc. Westwood's book value was only $140,000 at the time, but Roxy issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Roxy was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Westwood's records by $60,000 while equipment (five-year life) was undervalued...
Prepare balance sheet after acquisition Comparative balance sheets for Pop and Son Corporations at December 31,...
Prepare balance sheet after acquisition Comparative balance sheets for Pop and Son Corporations at December 31, 2015, are as follows (in thousands): Pop Son Current assets $2,080 $ 960 Land 800 1,600 Buildings—net 4,800 1,600 Equipment—net 3,520 3,840 Total assets $11,200 $8,000 Current liabilities $ 800 $ 960 Capital stock, $10 par 8000 3,200 Additional paid-in capital 800 2,240 Retained earnings 1,600 1,600 Total equities $11,200 $8,000 On January 2, 2016, Pop issues 240,000 shares of its stock with a...
39. On December 31, 2007 and 2008, Taft Corporation had 100,000 shares of common stock issued...
39. On December 31, 2007 and 2008, Taft Corporation had 100,000 shares of common stock issued and outstanding. Additional information: Stockholders' equity at 12/31/2008 $4,500,000 Net income year ended 12/31/2008 1,200,000 Market price per share of common stock at 12/31/2008 144 The price-earnings ratio on common stock at December 31, 2008, was a. 10 b. 12 c. 14 d. 16 The balance sheet at the end of the first year of operations indicates the following: 2009 Total current assets $600,000...
On December 31, 20X9, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000....
On December 31, 20X9, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000. Balance sheet information Venus just prior to the acquisition is given here: Cash and Receivables $35,000 Inventory 75,000 Land 100,000 Buildings and Equipment (net) 220,000 Total Assets $430,000 Accounts Payable $65,000 Bonds Payable 150,000 Common Stock 100,000 Retained Earnings 115,000 Total Liabilities and Stockholders’ Equity $430,000 At the date of the business combination, Venus's net assets and liabilities approximated fair value except for inventory,...
Here is financial information for Glitter Inc. December 31, 2020 December 31, 2019 Current assets $123,400...
Here is financial information for Glitter Inc. December 31, 2020 December 31, 2019 Current assets $123,400 $100,000 Plant assets (net) 394,350 330,000 Current liabilities 86,328 72,000 Long-term liabilities 133,280 85,000 Common stock, $1 par 166,440 120,000 Retained earnings 131,702 153,000 Prepare a schedule showing a horizontal analysis for 2020, using 2019 as the base year. (Enter negative amounts and percentages using either a negative sign preceding the number e.g. -45, -45% or parentheses e.g. (45), (45%). Round percentages to 1...
GREEN COMPANY issues 500,000 shares of its own P1 par common stock for the net assets...
GREEN COMPANY issues 500,000 shares of its own P1 par common stock for the net assets of YELLOW CORPORATION in a merger consummated on July 1, 2019. On this date, GREEN stock is quoted at P10 per share. Balance sheet data for the two companies at July 1, 2019, just before combination, are as follows:                                        GREEN YELLOW Current Assets                                    P18,000,000 P1,500,000 Plant Assets                                         22,000,000 6,500,000 Total Assets                                        P40,000,000 P8,000,000 Liabilities P12,000,000 P2,000,000 Common stock, P10 par                       20,000,000                 3,000,000 Additional...
Pain Corporation holds 90 percent of Soothing Company's common shares but none of its preferred shares....
Pain Corporation holds 90 percent of Soothing Company's common shares but none of its preferred shares. On the date of acquisition, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soothing Company. Summary balance sheets for the companies on December 31, 20X8, are as follows: Pain Corporation Soothing Company Cash and Receivables $ 80,000 $ 70,000 Inventory 40,000 30,000 Buildings and Equipment (net) 160,000 150,000 Investment in Soothing Company 135,000 0 Total...
A corporation issued 3,000 shares of $10 par value common stock for $36,000 cash. A corporation...
A corporation issued 3,000 shares of $10 par value common stock for $36,000 cash. A corporation issued 1,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $40,500. The stock has a $3 per share stated value. A corporation issued 1,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $40,500. The stock has no stated value. A corporation issued 750 shares of $75...
Presented here are the comparative balance sheets of Hames Inc. at December 31, 2020 and 2019....
Presented here are the comparative balance sheets of Hames Inc. at December 31, 2020 and 2019. Sales for the year ended December 31, 2020, totaled $660,000. HAMES INC. Balance Sheets December 31, 2020 and 2019 2020 2019 Assets Cash $ 25,000 $ 19,000 Accounts receivable 78,000 72,000 Merchandise inventory 103,000 99,000 Total current assets $ 206,000 $ 190,000 Land 50,000 40,000 Plant and equipment 125,000 110,000 Less: Accumulated depreciation (65,000 ) (60,000 ) Total assets $ 316,000 $ 280,000 Liabilities...