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    Exercise 3 CH 1

    Uploaded by

    Yousef Abuhejleh
    cosyd

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    © All Rights Reserved
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    Exercise 3 CH 1

    Uploaded by

    Yousef Abuhejleh
    3 views2 pages
    cosyd

    Original Title

    Exercise 3 Ch 1

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    © © All Rights Reserved

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    cosyd

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    3 views2 pages

    Exercise 3 CH 1

    Uploaded by

    Yousef Abuhejleh
    cosyd

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 2

    Ch 1 3

    Monday, October 26, 2020 10:13 AM

    On 1/1/2020, Pan Company acquired 100% of San by paying $200,000 cash and issuing
    70,000 of its own common stock ($2 par value, and $6 market price). San was dissolved at
    that date. Pan paid $30,000 as direct acquisition costs (accountants, registration, legal,…ect),
    and also paid $20,000 for the costs of issuing new shares.
    Following Balance sheets for the 2 companies at the date of acquisition:

    San Company
    Statement of Financial Position 1/1/2020
    Pan Company San Company San Company
    Book Value Book Value Fair Value
    Assets
    Cash $300,000 $80,000 $80,000
    Accounts Receivables 120,000 100,000 60,000
    Inventory 150,000 120,000 100,000
    Equipment-net 500,000 300,000 320,000
    Land 800,000 400,000 600,000
    Total Assets 1,870,000 1,000,000 1,160,000

    Liabilities and Owners’ Equity


    Accounts Payable 200,000 $150,000 $160,000
    Notes Payable 370,000 300,000 300,000
    Total Liabilities 570,000 450,000 460.000
    Shares Capital 1,000,000 400,000
    Retained Earning 300,000 150,000
    Total Owners’ Equity 1.300,000 550,000
    Total Liabilities and OE 1,870,000 1,000,000

    Instructions:
    1- Record the above transactions in Pan’s records at the date of acquisition.
    2- Prepare the balance sheet for Pan company directly after acquisition

    Advanced Accounting full Ch 1 cases Page 1


    Capital

    1,000,000
    140,000

    1,140,000

    Advanced Accounting full Ch 1 cases Page 2

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