Assume that par issues 25000 shares of its stock for all of


Journal entries and balance sheet for an acquisition

On January 2, 2011, Par Corporation issues its own $10 par common stock for all the outstanding stock of Sin Corporation in an acquisition. Sin is dissolved. In addition, Par pays $40,000 for registering and issuing securities and $60,000 for other costs of combination. The market price of Par's stock on January 2, 2011, is $60 per share. Relevant balance sheet information for Par and Sin Corporations on December 31, 2010, just before the combination, is as follows (in thousands):

 

Par Historical Cost

Sin Historical Cost

Sin Fair Value

Cash

$ 240

$ 20

$ 20

Inventories

100

60

120

Other current assets

200

180

200

Land

160

40

200

Plant and equipment-net

1,300

400

700

Total assets

$ 2,000

$700

$1,240

Liabilities

$ 400

$ 100

$ 100

Capital stock, $10 par

1,000

200

 

Additional paid-in capital

400

100

 

Retained earnings

200

300

 

Total liabilities and owners' equity

$2,000

$700

 

REQUIRED

1. Assume that Par issues 25,000 shares of its stock for all of Sin's outstanding shares.

a. Prepare journal entries to record the acquisition of Sin.

b. Prepare a balance sheet for Par Corporation immediately after the acquisition.

2. Assume that Par issues 15,000 shares of its stock for all of Sin's outstanding shares.

a. Prepare journal entries to record the acquisition of Sin.

b. Prepare a balance sheet for Par Corporation immediately after the acquisition.

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Accounting Basics: Assume that par issues 25000 shares of its stock for all of
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