Answer question 5 to 7

2. On 12/31, Choco acquired Cake by issuing 40,000 shares of its common stock when the market value (=fair value) is $32/share. Cake will remain incorporated. Choco has common stock with $15 par, 50,000 shares outstanding and Cake has $5 par, 60,000 shares outstanding Cash and Receivable Inventories Land Building and equipment Patented technology Accounts payable Long-term debt Common stock Additional paid in capital Retained earnings 12/31 Revenues Expenses Choco Book Values 350,000 250,000 700,000 600,000 100,000 300,000 0 750,000 500,000 450,000 350,000 310,000 Cake Book Values 180,000 100,000 120,000 600,000 0 120,000 400,000 300,000 60,000 120,000 160,000 130,000 Cake Fair Values 170,000 150,000 240,000 900,000 60,000 150,000 350,000 Q1. Prepare journal entry for acquisition in Choco's book. Q2. Prepare fair value allocation and goodwill schedule at the date of the acquisition. Q3. Choco paid $14,000 in cash for legal fee. What is the journal entry? Q4. Choco also paid $12,000 in cash for stock issuance cost. What is the journal entry? Q5. Prepare consolidation Entry S. Q6. Prepare consolidation Entry A. Q7. Prepare a worksheet to consolidate Choco's and Cake's balance sheet. Balance Sheet Choco Cake Consolidated Entries Debit Credit Consolidated Totals $324,000 Cash and receivable Inventory Investment in Cake $180,000 100,000 250,000 1,280,000 0 Land 120,000 700,000 600,000 100,000 Building and Equipment Patented technology Goodwill 600,000 0 0 0 $1,000,000 $3,254,000 (300,000) Total assets Accounts payable Long-term debt Common stock 0 Additional paid in capital (1,350,000) (1,168,000) (436,000) (120,000) (400,000) (300,000) (60.000) (120,000) $(1,000,000) Retained earnings 12/31 Total liabilities and equity $(3,254,000)