On January 1 of the current year, Healy Company purchased all of the common shares of Miller Company for $500,000 cash. Balance sheets of the two firms at acquisition follow.

During purchase negotiations, Miller's plant assets were appraised at $425,000; and all of its remaining assets and liabilities were appraised at values approximating their book values. Healy also concluded that an additional $45,000 (in goodwill) demanded by Miller's shareholders was warranted because Miller's earning power was better than the industry average.

(1) Prepare the consolidating adjustments

(2) Prepare the consolidated balance sheet at acquisition

(3) Prepare journal entries to record the transactions

(4) Post the journal entries to their respective T-accounts

(5) Record each of the transactions in the financial statement effects template.

Transcribed Image Text:

Miller Healy Company Consolidating Adjustments Consolldated Company Current assets $1,700,000 $120,000 Investment in tMiller.. 500,000 Plant assets, net. 3,000,000 410.000 Goodwill Total assets $5,200,000 $530,000 $ 700,000 3,500,000 $ 90.000 Liabilities... Contributed capital. Retained earnings 400,000 1,000,000 40,000 Total liabilities and equity. $5,200,000 $530,000