On January 2, 20X8, Primary Corporation acquired 100 percent of Street Company€™s outstanding common stock. In exchange for Street€™s stock, Primary issued bonds payable with a par and fair value of $650,000 directly to the selling stockholders of Street. The two companies continued to operate as separate entities subsequent to combination.

Immediately prior to the combination, the book values and fair values of the companies' assets and liabilities were as follows:
At the date of combination, Street owed Primary $6,000 plus accrued interest of $500 on a short-term note. Both companies have properly recorded these amounts.

Required
a. Record the business combination on the books of Primary Corporation.
b. Present in general journal form all elimination entries needed in a worksheet to prepare a consolidated balance sheet immediately following the business combination on January 2, 20X8.
c. Prepare and complete a consolidated balance sheet worksheet as of January 2, 20X8, immediately following the business combination.
d. Present a consolidated balance sheet for Primary and its subsidiary as of January 2,20X8.

Transcribed Image Text:

Street Company 1 2 6 2 Receivables Allowance for Bad Debts Buildings & Equipment Accumulated Depreciation Current Payables 2 2 Additional Paid-In Capital Total Liabilities & Equity