Question

On January 1, 2006, Pabst Company acquired 80% of Secor Company’s common stock and 30% of Secor Company’s 10% preferred stock. Pabst Company paid $680,000 for the common stock and $135,000 for the preferred stock. The preferred stock is cumulative and nonparticipating and has a call price of $104. On the date of acquisition, there were no dividends in arrears. On January 1, 2006, Secor Company reported the following account balances:
10% Preferred Stock ($100 par value)........... $ 400,000
Common Stock ($10 par value) ............ 500,000
Other Contributed Capital (Sale of common stock
in excess of par value) ............... 100,000
Retained Earnings.................. 230,000
Total....................... $1,230,000

Condensed preclosing trial balances for the two companies at December 31, 2011 are presentedbelow.


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  • CreatedMarch 13, 2015
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