The Bird Company is purchasing the Fish Sail Company. The Fish Sail Company's Balance Sheet information on
Question:
The Bird Company is purchasing the Fish Sail Company.
The Fish Sail Company's Balance Sheet information on June 30, 2018 is as follows:
Assets
Cash $ 43,600
Accounts Receivable 55,800
Inventories 141,000
Land 95,000
Building, net 368,000
Equipment, net 39,760
Patent 55,000
Trademark 5,000
Total Assets $803,160
Liabilities
Accounts Payable $ 77,440
Stockholders' Equity
Common Stock $600,000
Retained Earnings 125,720
Total Liabilities and
Stockholder's Equity $803,160
Bird Company will pay $800,000 cash down, sign and issue a Note Payable to Fish Sail Company in the amount of $500,000, and assume the Accounts Payable. All assets listed in the balance sheet will be acquired by Bird Company at their listed amounts, with the exception of the following assets which will be acquired at their agreed fair values as follows:
Inventories $175,300
Land $145,000
Building $502,000
Patent $85,000
Trademark $25,000
Solve
1. Prepare the journal entries on Bird Company's books to record the purchase.
2. Prepare the journal entry on Fish Sail Company's books to record the sale.
3 Prepare list of the specific components of the gain for Fish Sail Company.
4.Prepare the Balance Sheet for Fish Sail Company as of June 30, 2018 immediately after the sale to Bird Company.
Expert Answer:
SOLUTION 1 ASSETS AMOUNT CASH 43600 ACCOUNTS RECEIVABLE 55800 INVENTORIES 175300 LAND 145000 BUILDIN... View the full answer
