Use the same facts as in Problem 23, but assume instead that Alder pays cash of $4,200,000 to acquire Beech. No stock is issued. Prepare Alder’s journal entries to record its acquisition of Beech.

Problem 23

The following book and fair values were available for Beech Company as of June 1:

Alder Company pays $3,900,000 cash and issues 20,000 shares of its $2 par value common stock (fair value of $50 per share) for all of Beech’s common stock in a merger, after which Beech will cease to exist as a separate entity. Stock issue costs amount to $25,000, and Alder pays $42,000 for legal fees to complete the transaction. Prepare Alder’s journal entries to record its acquisition of Beech.

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Inventory Land Buildings Trademarks Accounts payable Common stock Additional paid-in capital Retained earnings, 1/1 Revenues Expenses Book Value $ 630,000 750,000 1,700,000 -0- (80,000) (2,000,000) (500,000) (360,000) (420,000) 280,000 Fair Value $ 600,000 990,000 2,000,000 800,000 (80,000)