Patel Company purchased all the outstanding common stock of Singh Company on December 31, 2011. Just before the purchase, the condensed balance sheets of the two companies were as follows.
|
Patel Company |
Singh Company |
|
|
Current assets |
$1,478,000 |
$379,000 |
|
Plant and equipment (net) |
1,882,000 |
351,000 |
|
$3,360,000 |
$730,000 |
|
|
Current liabilities |
$ 870,000 |
$ 90,000 |
|
Common stock |
1,947,000 |
360,000 |
|
Retained earnings |
543,000 |
280,000 |
|
$3,360,000 |
$730,000 |
Patel used current assets of $710,000 to acquire the stock of Singh. The excess of this purchase price over the book value of Patel’s net assets is determined to be attributable $20,000 to Singh’s plant and equipment and the remainder to goodwill.
Instructions
(a) Prepare the entry for Patel Company’s acquisition of Singh Company stock.
(b) Prepare a consolidated worksheet at December 31, 2011.
(c) Prepare a consolidated balance sheet at December 31, 2011.