On December $31,2019,$ P company issued $30,000$ shares of its $$2$par common stock $($current fair value $$30$ a share$)$ to stockholders of S company in exchange for $70\%$ of the $50,000$ outstanding shares of S$$s $$5$ par common stock in a business combination.

Out of pocket costs of the business combination paid by P on December $31,2019,$ Finder$$s & legal fees $$10,000$ and Registration Costs $$22,000.$ Balance Sheet of P Corporation and S Company for the year ended December $31,2019,$ prior to consummation of the business combination, follows:

P CORPORATION AND S COMPANY

Separate Financial Statements $($prior to business combination$)$

For Year Ended December $31,2019$

P Corp.

S Comp

Balance Sheets

Assets

Cash

$$50,000$

$$20,000$

Inventories

$$20,000$

$$10,000$

Other Current Assets

$100,000$

$$60,000$

Building

$100,000$

$$60,000$

Plant Assets $($Net$)$

$$400,000$

$$200,000$

Goodwill $($net$)$

$$20,000$

$$0$

$$ Total Assets

$690,000$

$350,000$

Liabilities and Stockholders' Equity

Account payable

$100,000$

$$60,000$

Income Taxes Payable

$10,000$

$5,000$

Other Liabilities

$$30,000$

$$10,000$

Common Stock, $$2$par

$150,000$

Common Stock, $$5$ par

$$250,000$

Additional Paid$-$In Capital

$100,000$

$15,000$

Retained Earnings

$$300,000$

$$10,000$

$$ Total Liabilities & Stockholders$$ Equity

$690,000$

$350,000$

$$

On December $31,2019,$ the current fair values of S company$$s identifiable assets and liabilities were the same as their carrying amounts except the inventory $$15,000,$ building $$75,000$ and account payable $$70,000.$

Instructions:

$1-$ Prepare the journal entries for the business combinations on $31/12/2019.(2\mathrm{.}5$ Points$)$

$2-$ Prepare the consolidated balance sheet with working paper on $31/12/2019,$ and the necessary entries $(5$ Points$)$ Question $2$: $(7\mathrm{.}5$ points$)$: B$1,$ C$1,$ C$3$

On December $31,2019.$ P company issued $30,000$ shares of its $\backslash (\backslash$$ $2\backslash )$ par common stock $($current fair value $\backslash (\backslash$$ $30\backslash )$ a share$)$ to stockholders of $\backslash (\backslash$$ $\backslash )$ company in exchange for $\backslash (70\backslash \%\backslash )$ of the $50,000$ outstanding shares of S$\text{'}$s $\backslash$$$5$ par common stock in a business combination

Out of pocket costs of the business combination paid by P on December $31,2019,$ Finder's $\backslash$& legal fees $\backslash (\backslash$$ $10,000\backslash )$ and Registration Costs $\backslash (\backslash$$ $22,000\backslash ).$ Balance Sheet of P Corporation and S Company for the year ended December $31,2019,$ prior to consummation of the business combination, follons:

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$P CORPORATION AND S COMPANY$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Separate Financial Statements $($prior to business combimation$)\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$For Year Ended December $31,2019\}\backslash \backslash$

$\backslash$hline & P Corp. & S Comp $\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Balance Sheets$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Assets$\}\backslash \backslash$

$\backslash$hline Canh & $\backslash$$$50,000$ & $520,000\backslash \backslash$

$\backslash$hline Inventories & $\backslash$$$20,000$ & $\backslash$$$10,000\backslash \backslash$

$\backslash$hline Other Current Assets & $100,000$ & $\backslash$$$60,000\backslash \backslash$

$\backslash$hline Building & $100,000$ & $\backslash$$$60,000\backslash \backslash$

$\backslash$hline Plant Asset$5($Net$)$ & $\backslash$$$400,000$ & $\backslash$$$200,000\backslash \backslash$

$\backslash$hline Gooduill $($net$)$ & $\backslash$$$20,000$ & $50\backslash \backslash$

$\backslash$hline Total Asseta & $690,000$ & $350,000\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Liabilities and Stockholders' Equity$\}\backslash \backslash$

$\backslash$hline Account payable & $100,000$ & $\backslash$$$60,000\backslash \backslash$

$\backslash$hline Income Taxes Payable & $10,000$ & $5,000\backslash \backslash$

$\backslash$hline Other Liabilities & $\backslash (\backslash$$ $30,000\backslash )$ & $\backslash$$$10,000\backslash \backslash$

$\backslash$hline Common Stock $\backslash$$$2$par & $150,000$ & $\backslash \backslash$

$\backslash$hline Common Stock, $\backslash$$$5$ par & & $\backslash$$$230,000\backslash \backslash$

$\backslash$hline Additional Paid$-$In Capital & $100,000$ & $15,000\backslash \backslash$

$\backslash$hline Retained Eamings & $\backslash$$$300,000$ & $\backslash$$$10,000\backslash \backslash$

$\backslash$hline Total Liabilities $\backslash$& Stockholders Equity & $690,000$ & $350,000\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

On December $31,2019,$ the current fair values of S company's identifiable assets and linbilities were the same as their carrying amounts except the inventory $\backslash (\backslash$$ $15,000\backslash ),$ building $\backslash (\backslash$$ $75,000\backslash )$ and account payable $\backslash (\backslash$$ $70,000\backslash ).$

Instructions:

$1-$ Prepare the joumal entries for the business combinations on $31/12/2019.(2\mathrm{.}5$ Points$)$

$2-$ Prepare the consoldated balance sheet with working paper on $31/12/2019,$ and the necessary entries $(5$ Points$)$