Consolidated Balance Sheet, Stock Purchase
On January 2, 2011, Prunce Company acquired 90% of the...

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Consolidated Balance Sheet, Stock Purchase
On January 2, 2011, Prunce Company acquired 90% of the outstanding common stock of Sun Company for $192,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows:

Aimee

Sun

Cash

$260,000

$ 64,000

Accounts receivable (net)

142,000

23,000

Inventory

117,000

54,000

Plant and equipment (net)

386,000

98,000

Land

63,000

32,000

Total asset

$968,000

$271,000

Accounts payable

$104,000

$ 47,000

Mortgage payable

72,000

39,000

Common stock, $2 par value

400,000

70,000

Other contributed capital

208,000

20,000

Retained earnings

184,000

95,000

Total equities

$968,000

$271,000

The fair values of Sun Company"s assets and liabilities are equal to their book values with the exception of land.
Required:

Prepare a journal entry to record the purchase of Sun Company"s common stock.
Prepare a consolidated balance sheet at the date of acquisition.

David · Accepted Answer

Consolidated Balance Sheet, Stock Purchase 
On January 2, 2011, Prunce Company acquired 90% of the outstanding common stock of Sun Company for 
$192,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows: 
 
Aimee Sun 
Cash $260,000 $ 64,000 
Accounts receivable (net) 142,000 23,000 
Inventory 117,000 54,000 
Plant and equipment (net) 386,000 98,000 
Land 63,000 32,000 
Total asset $968,000 $271,000 
Accounts payable $104,000 $ 47,000 
Mortgage payable 72,000 39,000 
Common stock, $2 par value 400,000 70,000 
Other contributed capital 208,

Consolidated Balance Sheet, Stock Purchase On January 2, 2011, Prunce Company acquired 90% of the outstanding common stock of Sun Company for $192,000 cash. Just before the acquisition, the balance...

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