Pooling using treasury stock. Marcus Company is going to exchange its 10,000 treasury shares for all 50,000 outstanding shares of Koempfer Company in a business combination to be recorded as a pooling of interests. Just prior to the pooling, the two companies had the following balance sheets:
|
Assets |
Marcus |
Koempfer |
||
|
Current assets |
$310,000 |
$200,000 |
||
|
Property, plant, and equipment (net) |
1,400,000 |
800,000 |
||
|
Total assets |
$1,710,000 |
$1,000,000 |
||
|
Liabilities and Equity |
Marcus |
Koempfer |
||
|
Current liabilities |
$170,000 |
$90,000 |
||
|
Common stock |
($5 par) |
500,000 |
($2 par) |
100,000 |
|
Paid in capital in excess of par |
800,000 |
170,000 |
||
|
Retained earnings |
360,000 |
640,000 |
||
|
Treasury stock at cost, 10,000 shares |
120,000 |
|||
|
Total liabilities and equity |
$1,710,000 |
$1,000,000 |
Prepare the journal entries for Marcus Company to record the pooling of interests with Koempfer Company. Hint: Prepare an entry for Koempfer to retire the treasury stock. Then, adjust Koempfer’s balance sheet for this entry prior to recording the pooling.