(solution) On June 30, 2015, Wisconsin, Inc., issued $392,500 in debt and

(solution) On June 30, 2015, Wisconsin, Inc., issued $392,500 in debt and

On June 30, 2015, Wisconsin, Inc., issued $392,500 in debt and 15,400 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2015, were as follows:

 

  Wisconsin Badger
  Revenues $ (1,023,000 ) $ (305,000)    
  Expenses   692,000     202,000     
 

 

 

 

 

 

 

     Net income $ (331,000 ) $ (103,000)    
 

 

 

 

 

 

 

  Retained earnings, 1/1 $ (813,000 ) $ (294,000)    
  Net income   (331,000 )   (103,000)    
  Dividends declared   108,500     0     
 

 

 

 

 

 

 

     Retained earnings, 6/30 $ (1,035,500 ) $ (397,000)    
 

 

 

 

 

 

 

  Cash $ 102,500   $ 100,000     
  Receivables and inventory   419,000     159,000     
  Patented technology (net)   948,000     354,000     
  Equipment (net)   771,000     697,000     
 

 

 

 

 

 

 

     Total assets $ 2,240,500   $ 1,310,000     
 

 

 

 

 

 

 

  Liabilities $ (575,000 ) $ (443,000)    
  Common stock   (360,000 )   (200,000)    
  Additional paid-in capital   (270,000 )   (270,000)    
  Retained earnings   (1,035,500 )   (397,000)    
 

 

 

 

 

 

 

     Total liabilities and equities $ (2,240,500 ) $ (1,310,000)    
 

 

 

 

 

 

 

 

Note: Parentheses indicate a credit balance.

 

     Wisconsin also paid $31,700 to a broker for arranging the transaction. In addition, Wisconsin paid $49,200 in stock issuance costs. Badger?s equipment was actually worth $800,500, but its patented technology was valued at only $326,000.

 

What are the consolidated balances for the following accounts? (Input all amounts as positive values.)

Accounts                                                 Amounts
a. New income                                     $
b. Retained earnings, 1/1/15             $
c. Patented technology                       $
d. Goodwill                                           $
e. Liabilities                                          $
f. Common stock                                 $    
g. Additional paid-in capital              $
Under the acquisition method, the shares issued by Wisconsin are recorded at fair value using the following journal entry:
DR
CR
CR
CR Investment in Badger (value of debt and shares issued)
Common…