Robinson Corporation purchased all the outstanding common stock of Hoffman Plastics, Inc. on December 31, 2011. Just before the purchase, the condensed balance sheets of thetwo companies appeared as follows.
|
Robinson Corporation |
Hoffman Plastics, Inc. |
|
|
Current assets |
$1,480,000 |
$ 435,500 |
|
Plant and equipment (net) |
2,100,000 |
676,000 |
|
$3,580,000 |
$1,111,500 |
|
|
Current liabilities |
$ 578,000 |
$ 92,500 |
|
Common stock |
1,950,000 |
525,000 |
|
Retained earnings |
1,052,000 |
494,000 |
|
$3,580,000 |
$1,111,500 |
Robinson used current assets of $1,225,000 to acquire the stock of Hoffman Plastics. The excess of this purchase price over the book value of Hoffman Plastics’ net assets is determined to be attributable $86,000 to Hoffman Plastics’ plant and equipment and the remainder to goodwill.
Instructions
(a) Prepare the entry for Robinson’s acquisition of Hoffman Plastics, Inc. stock.
(b) Prepare a consolidated worksheet at December 31, 2011.
(c) Prepare a consolidated balance sheet at December 31, 2011.