Required:

Prepare all journal entries that Pintime should have entered on its books to record the business combination.

Note: If no entry is required for a transaction$/$event$,$ ?select $"$No journal entry required" in the first account field.

Prepare all journal entries that should have been entered on SCC$?$s books to record the combination and the distribution of the stock received.

Note: If no entry is required for a transaction$/$event$,$ ?select $"$No journal entry required" in the first account field.

Transcribed Image Text:

Pintime Industries Incorporated entered into a business combination agreement with Sydrolized Chemical Corporation (SCC) to ensure an uninterrupted supply of key raw materials and to realize certain economies from combining the operating processes and the marketing efforts of the two companies. Under the terms of the agreement, Pintime issued 180,100 shares of its $2 par common stock in exchange for all of SCC's assets and liabilities. The Pintime shares then were distributed to SCC's shareholders, and SCC was liquidated. Immediately prior to the combination, SCC's balance sheet appeared as follows, with fair values also indicated: Assets Cash Accounts Receivable Less: Allowance for Bad Debts Inventory Long-Term Investments Land Rolling Stock Plant and Equipment Less: Accumulated Depreciation Patents Special Licenses Total Assets Liabilities Current Payables Mortgages Payable Equipment Trust Notes Debentures Payable Book Values Fair Values $ 28,000 249,000 $ 28,000 243,900 (5,100) 365,000 379,000 133,000 158,000 44,000 94,000 120,000 52,000 2,421,000 2,486,000 (607,000) 482,000 98,100 114,000 94,400 $ 2,956,300 $ 138,100 508,000 106,000 1,030,000 $ 4,021,000 $ 138,100 528,000 101,000 980,000 (41,000) $ 1,747,100 Less: Discount on Debentures Total Liabilities Stockholders' Equity Common Stock ($6 par) Additional Paid-In Capital from Common Stock Additional Paid-In Capital from Retirement of Preferred Stock Retained Earnings Less: Treasury Stock (1,200 shares) Total Liabilities and Equity $ 1,741,100 583,000 508,000 20,000 120,200 (16,000) $ 2,956,300 Immediately prior to the combination, Pintime's common stock was selling for $15 per share. Pintime incurred direct costs of $153,000 in arranging the business combination and $49,000 of costs associated with registering and issuing the common stock used in the combination. Pintime Industries Incorporated entered into a business combination agreement with Sydrolized Chemical Corporation (SCC) to ensure an uninterrupted supply of key raw materials and to realize certain economies from combining the operating processes and the marketing efforts of the two companies. Under the terms of the agreement, Pintime issued 180,100 shares of its $2 par common stock in exchange for all of SCC's assets and liabilities. The Pintime shares then were distributed to SCC's shareholders, and SCC was liquidated. Immediately prior to the combination, SCC's balance sheet appeared as follows, with fair values also indicated: Assets Cash Accounts Receivable Less: Allowance for Bad Debts Inventory Long-Term Investments Land Rolling Stock Plant and Equipment Less: Accumulated Depreciation Patents Special Licenses Total Assets Liabilities Current Payables Mortgages Payable Equipment Trust Notes Debentures Payable Book Values Fair Values $ 28,000 249,000 $ 28,000 243,900 (5,100) 365,000 379,000 133,000 158,000 44,000 94,000 120,000 52,000 2,421,000 2,486,000 (607,000) 482,000 98,100 114,000 94,400 $ 2,956,300 $ 138,100 508,000 106,000 1,030,000 $ 4,021,000 $ 138,100 528,000 101,000 980,000 (41,000) $ 1,747,100 Less: Discount on Debentures Total Liabilities Stockholders' Equity Common Stock ($6 par) Additional Paid-In Capital from Common Stock Additional Paid-In Capital from Retirement of Preferred Stock Retained Earnings Less: Treasury Stock (1,200 shares) Total Liabilities and Equity $ 1,741,100 583,000 508,000 20,000 120,200 (16,000) $ 2,956,300 Immediately prior to the combination, Pintime's common stock was selling for $15 per share. Pintime incurred direct costs of $153,000 in arranging the business combination and $49,000 of costs associated with registering and issuing the common stock used in the combination.