Pancor Corporation paid cash of $167,000 to acquire Sink Company's net assets on February 1, 20X3. The balance sheet data for the two companies and fair value information for Sink immediately before the business combination were: Pancor Corporation Sink Company Balance Sheet Item Book Value Book Value Fair Value Assets Cash $ 257,000 $ 16,000 $ 16,000 Accounts Receivable 149,000 34,000 34,000 Inventory 175,000 44,000 48,000 Patents 86,000 44,000 57,000 Buildings & Equipment 388,000 327,000 144,000 Less: Accumulated Depreciation (182,000) (192,000) Total Assets $ 873,000 $ 273,000 $ 299,000 Liabilities & Equities Accounts Payable $ 79,000 $ 63,000 $ 63,000 Notes Payable 139,000 127,000 127,000 Common Stock: $8 par value 181,000 $6 par value 12,000 Additional Paid-In Capital 141,000 7,000 Retained Earnings 333,000 64,000 Total Liabilities & Equities $ 873,000 $ 273,000 Required: a. Prepare the journal entry recorded by Pancor Corporation when it acquired Sink's net assets.

Question

Madalyn Wells

Business

15 March, 19:03

Pancor Corporation paid cash of $167,000 to acquire Sink Company's net assets on February 1, 20X3. The balance sheet data for the two companies and fair value information for Sink immediately before the business combination were: Pancor Corporation Sink Company Balance Sheet Item Book Value Book Value Fair Value Assets Cash $ 257,000 $ 16,000 $ 16,000 Accounts Receivable 149,000 34,000 34,000 Inventory 175,000 44,000 48,000 Patents 86,000 44,000 57,000 Buildings & Equipment 388,000 327,000 144,000 Less: Accumulated Depreciation (182,000) (192,000) Total Assets $ 873,000 $ 273,000 $ 299,000 Liabilities & Equities Accounts Payable $ 79,000 $ 63,000 $ 63,000 Notes Payable 139,000 127,000 127,000 Common Stock: $8 par value 181,000 $6 par value 12,000 Additional Paid-In Capital 141,000 7,000 Retained Earnings 333,000 64,000 Total Liabilities & Equities $ 873,000 $ 273,000 Required: a. Prepare the journal entry recorded by Pancor Corporation when it acquired Sink's net assets.

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Answers (1)

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Jacey Yang · Answer 1

Answer and Explanation:

As per the data given in the question,

Journal entry for Pancor Corporation -

Cash A/c Dr. $16,000

Account receivable A/c Dr. $34,000

Inventory A/c Dr. $48,000

Patents A/c Dr. $57,000

Building A/c Dr. $144,000

Goodwill A/c Dr. $299,000

To Account Payable $63,000

To Notes payable $127,000

To Purchase consideration A/c $167,000

(Being the acquired net assets is recorded)

We debited the all assets and credited the liabilities as it increased the assets and liabilities and the remaining balance is debited to goodwill