The financial statements for Metzger Inc. and Ortiz Corp., just prior to their combination, for the year ending December 31, 2012, follow. Ortiz's buildings were undervalued on its financial records by $80,000.

	Metzger Inc.	Ortiz Corp.
Revenues	$1,800,000	$700,000
Expenses	(1,580,000)	(590,000)
Net income	$220,000	$110,000
Retained earnings, January 1, 2012	800,000	600,000
Net income (above)	220,000	110,000
Dividends paid	(130,000)	(80,000)
Retained earnings, December 31, 2012	$890,000	$630,000
Cash	$240,000	$160,000
Receivables and inventory	270,000	260,000
Buildings (net)	850,000	500,000
Equipment (net)	800,000	490,000
Total assets	$2,160,000	$1,410,000
Liabilities	$310,000	$155,000
Common stock	850,000	530,000
Additional paid-in capital	110,000	95,000
Retained earnings, December 31, 2012 (above)	890,000	630,000
Total liabilities and stockholders' equity	$2,160,000	$1,410,000

On December 31, 2012, Metzger issued 58,000 new shares of its $10 par value stock in exchange for all the outstanding shares of Ortiz. Metzger's shares had a fair value on that date of $40 per share. Metzger paid $38,000 to an investment bank for assisting in the arrangements. Metzger also paid $28,000 in stock issuance costs to effect the acquisition of Ortiz. Ortiz will retain its incorporation.

-1) Prepare the journal entry to record the issuance of common stock by Metzger.
-2) Prepare the journal entry to record the payment of combination costs.
-3) Determine consolidated net income for the year ended December 31, 2012.
-4) Determine consolidated additional paid-in capital at December 31, 2012. 

Answer rating: 100% (QA)

1 Investment in Ortiz Corp 2320000 Common stock par value 580000 ... View the full answer