GAGA AND BIEBER COMPANIES HAVE THE FOLLOWING BALANCE SHEETS ON JANUARY 1, 2016GAGA BIEBERCASH...

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GAGA AND BIEBER COMPANIES HAVE THE FOLLOWING BALANCE SHEETS ON JANUARY 1, 2016GAGA BIEBERCASH 10,000,000 500,000A/R 5,000,000 200,000EQUIPMENT 10,000,000 1,000,000A/D EQUIPMENT 1,000,000 100,000LAND 1,000,000 200,000TOTAL ASSETS 25,000,000 1,800,000NOTE PAYABLE 5,000,000 800,000COMMON STOCK 10,000,000 600,000RETAINED EARNINGS 10,000,000 400,000ON JANUARY 2ND GAGA ACQUIRED ALL OF THE OUTSTANDING STOCK OF BIEBER COMPANY FROM BIEBER’S STOCKHOLDERS BY ISSUING 500,000 SHARES OF GAGA STOCK WHEN GAGA HAD A MARKET VALUE OF $5 PER SHARE. ON JANUARY 2ND THE FAIR MARKET VALUE OF BIEBER’S EQUIPMENT WAS $1,100,000 AND THE FAIR MARKET VALUE OF BIEBER’S LAND WAS $50,000. BIEBER WILL CONTINUE TO EXIST AFTER THIS ACQUISITION.REQUIRED: MAKE THE JOURNAL ENTRY GAGA MAKES WHEN IT ACQUIRES ALL OF THE STOCK OF BIEBER BY ISSUING ITS 500,000 SHARESMAKE THE JOURNAL ENTRY BIEBER MAKES WHEN ITS STOCKHOLDERS SELL THEIR STOCK TO GAGA FOR GAGA STOCKPREPARE A CONSOLIDATED BALANCE SHEET ON JANUARY 3RDPREPARE ANY NECESSARY WORKSHEET ENTRIES NEEDED TO CONSTRUCT THE CONSOLIDATED BALANCE SHEET
	
Document Preview: PROBLEM 2:  GAGA AND BIEBER COMPANIES HAVE THE FOLLOWING BALANCE SHEETS ON JANUARY 1, 2016				 XXXXXXXXXXGAGA			BIEBER	CASH					10,000,000		500,000A/R					5,000,000		200,000EQUIPMENT				10,000,000		1,000,000A/D EQUIPMENT			1,000,000		100,000	LAND					1,000,000		200,000TOTAL ASSETS			25,000,000		1,800,000NOTE PAYABLE			5,000,000		800,000COMMON STOCK			10,000,000		600,000RETAINED EARNINGS		10,000,000		400,000ON JANUARY 2ND GAGA ACQUIRED ALL OF THE OUTSTANDING STOCK OF BIEBER COMPANY FROM BIEBER’S STOCKHOLDERS BY ISSUING 500,000 SHARES OF GAGA STOCK WHEN GAGA HAD A MARKET VALUE OF $5 PER SHARE. ON JANUARY 2ND THE FAIR MARKET VALUE OF BIEBER’S EQUIPMENT WAS $1,100,000 AND THE FAIR MARKET VALUE OF BIEBER’S LAND WAS $50,000. BIEBER WILL CONTINUE TO EXIST AFTER THIS ACQUISITION. REQUIRED: MAKE THE JOURNAL ENTRY GAGA MAKES WHEN IT ACQUIRES ALL OF THE STOCK OF BIEBER BY ISSUING ITS 500,000 SHARES MAKE THE JOURNAL ENTRY BIEBER MAKES WHEN ITS STOCKHOLDERS SELL THEIR STOCK TO GAGA FOR GAGA STOCKPREPARE A CONSOLIDATED BALANCE SHEET ON JANUARY 3RDPREPARE ANY NECESSARY WORKSHEET ENTRIES NEEDED TO CONSTRUCT THE CONSOLIDATED BALANCE SHEET

David · Accepted Answer

ANSWER 
Gaga Journal  
    PARTICULARS                                        DR                        CR 
Jan 2 shares issued 500 000 @5                  2 500 000 
        Outstanding shares 100 000 @5            500 000 
       Cash                                                                                     600 000
                                  Bieber Journal
PARTICULARS                                          DR                      CR 
Cash     600 000 shares @ 5                     3000 000
 CONSOLIDATED BALANCE SHEET 
          AS AT 3RD JANUARY
                                         GAGA                  BIEBER                         CONSOLIDATED 
                                                                                       Amounts  
ASSETS  
Cash                           9,800 000              3,500 000                             12,900 000 
 A/R                         5,000,000          200,000                               5,200 000 
EQUIPMENT          10,000,000       1 100 000                            11 100 000 
A/D EQUIPMENT 1,000,000           100 000                                 1 100 000 
LAND   1,000,000            50,000                         1 050 000
 TOTAL ASSETS   26,800,000                   4,950 000                          31,750,000
NOTE PAYABLE              5,000,000   800,000                               5 800 000
COMMON STOCK   10,480,000         -                                 10 4800 000 
RETAINED 
 EARNINGS        10,320,000   400,000                            10 400 000
Gain in R/E              100 000                         3750 000                             10 350 000
                                26,800,000                      4 950 000                           31,750,000
Work sheets: 
Ajustments     
                                       Gaga                                                                Beiber                                                                      
                               cash     account                                                     cash acount 
Jan 2
nd 
b/d  10 000 000  beiber       600 000           jan 2
nd
 bal b/d 500 000   
                                           Bal b/d  9400 000           Gaga            3 000 000  bal c/d 3 500 
000 
                                                                                                         3 500 000               3 500 
000 
Calculations: 
Gaga change in Common stock     10 000 000 + 80 %4800 000= 10 480 000 
Beiber change in equipment           1000 000- 100 000 = 1 100 000 
              Change in common stock      600 000- 600 000=  0

GAGA AND BIEBER COMPANIES HAVE THE FOLLOWING BALANCE SHEETS ON JANUARY 1, 2016 GAGA BIEBER CASH 10,000,000 500,000 A/R 5,000,000 200,000 EQUIPMENT 10,000,000 1,000,000 A/D EQUIPMENT 1,000,000 100,000...

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