On January 2, 2020, Bonita Company acquired 90% of the outstanding common stock of Metlock Company...

 

 

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On January 2, 2020, Bonita Company acquired 90% of the outstanding common stock of Metlock Company for $540,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows: Bonita Metlock Cash $730,000 $170,000 Accounts Receivable (net) 345,000 78,000 Inventory 280,000 134,000 Plant and Equipment (net) 1,020,000 240,000 Land 140,000 100,000 Total Assets $2,515,000 $722,000 Accounts Payable $260,000 $100,000 Mortgage Payable 170,000 110,000 Common Stock, $2 par value 1,025,000 180,000 Other Contributed Capital 600,000 60,000 Retained Earnings 460,000 272,000 Total Equities $2,515,000 $2,515,000 The fair values of Metlock's assets and liabilities are equal to their book values with the exception of land. Prepare the journal entry necessary to record the purchase of Smithwick's common stock. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit On January 2, 2020, Bonita Company acquired 90% of the outstanding common stock of Metlock Company for $540,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows: Bonita Metlock Cash $730,000 $170,000 Accounts Receivable (net) 345,000 78,000 Inventory 280,000 134,000 Plant and Equipment (net) 1,020,000 240,000 Land 140,000 100,000 Total Assets $2,515,000 $722,000 Accounts Payable $260,000 $100,000 Mortgage Payable 170,000 110,000 Common Stock, $2 par value 1,025,000 180,000 Other Contributed Capital 600,000 60,000 Retained Earnings 460,000 272,000 Total Equities $2,515,000 $2,515,000 The fair values of Metlock's assets and liabilities are equal to their book values with the exception of land. Prepare the journal entry necessary to record the purchase of Smithwick's common stock. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit

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