Monday, 22 October 2012

On January 1, 2013, Pinnacle Corporation exchanged $3,200,000 cash for 100 percent of the outstanding voting stock of Strata Corporation. Pinnacle plans to maintain Strata as a wholly owned subsidiary with separate legal status and accounting information systems.

On January 1, 2013, Pinnacle Corporation exchanged $3,200,000 cash for 100 percent of the outstanding voting stock of Strata Corporation. Pinnacle plans to maintain Strata as a wholly owned subsidiary with separate legal status and accounting information systems.

At the acquisition date, Pinnacle prepared the following fair-value allocation schedule:
   
           
  Fair value of Strata (consideration transferred)       $ 3,200,000  
  Carrying amount acquired         2,600,000  
       

  Excess fair value       $ 600,000  
     to buildings (undervalued) $ 300,000         
     to licensing agreements (overvalued)   (100,000)       200,000  
 




     to goodwill (indefinite life)       $ 400,000  
       





Immediately after closing the transaction, Pinnacle and Strata prepared the following postacquisition balance sheets from their separate financial records.

Accounts Pinnacle   Strata
  Cash $ 433,000     $ 122,000  
  Accounts receivable   1,210,000       283,000  
  Inventory   1,235,000       350,000  
  Investment in Strata   3,200,000       0  
  Buildings (net)   5,572,000       1,845,000  
  Licensing agreements   0       3,000,000  
  Goodwill   350,000       0  
 






     Total assets $ 12,000,000     $ 5,600,000  
 













  Accounts payable   (300,000 )     (375,000 )
  Long-term debt   (2,700,000 )     (2,625,000 )
  Common stock   (3,000,000 )     (1,000,000 )
  Additional paid-in capital   0       (500,000 )
  Retained earnings   (6,000,000 )     (1,100,000 )
 






     Total liabilities and equities $ (12,000,000 )   $ (5,600,000 )
 














Note: Parentheses indicate a credit balance.

Prepare a January 1, 2013, consolidated balance sheet for Pinnacle Corporation and its subsidiary Strata Corporation. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values.)

PINNACLE COMPANY AND CONSOLIDATED SUBSIDIARY STRATA
Consolidated Balance Sheet
 January 1, 2013
Assets    Liabilities and Owners' Equity  
  Cash $     Accounts payable $  
  Accounts receivable     Long-term debt  
  Inventory     Common stock  
  Buildings (net)     Additional paid-in capital  
  Licensing agreements     Retained earnings  
  Goodwill      
 
 
     Total assets $        Total liabilities and equities $  
 

 




Explanation:
 

The following book and fair values were available for Westmont Company as of March 1.

The following book and fair values were available for Westmont Company as of March 1.
  Book Value Fair Value
  Inventory $ 630,000   $ 600,000  
  Land   750,000     990,000  
  Buildings   1,700,000     2,000,000  
  Customer relationships   0     800,000  
  Accounts payable   (80,000 )   (80,000 )
  Common stock   (2,000,000 )      
  Additional paid-in capital   (500,000 )      
  Retained earnings 1/1   (360,000 )      
  Revenues   (420,000 )      
  Expenses   280,000        

Note: Parentheses indicate a credit balance.

Arturo Company pays $4,000,000 cash and issues 20,000 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,000 and Arturo pays $42,000 for legal fees to complete the transaction.

Prepare Arturo’s journal entry to record its acquisition of Westmont.

General Journal        Debit           Credit     
  To record acquisition of Westmont Company.    
  Inventory correct  correct      
  Land correct  correct      
  Buildings correct  correct      
  Customer Relationships correct  correct      
  Goodwill correct  correct      
     Accounts Payable correct    correct    
     Common Stock correct    correct    
     Additional Paid-In Capital correct    correct    
     Cash correct    correct    
     
  To record legal fees related to the combination.    
  Professional Services Expense correct 42,000 correct      
     Cash correct   42,000 correct    
     
  To record payment of stock issuance costs.    
  Additional Paid-In Capital correct 25,000 correct      
     Cash correct   25,000 correct    

The weekly tickets indicate the following distribution of labor hours for three direct labor employees:

Ex19-7.) The weekly tickets indicate the following distribution of labor hours for three direct labor employees:

Hours
Job 111 Job 112 Job 113 Process Improvement
Johnny Daniels 18 & nbsp; 10 5 7
Jack Walker 7 &nbs p; 8 23 2
Jim Morgan ; 8 12 16 4

The Direct labor rate earned by the three employees is as follows:
Daniels $11.40
Walker 13.50
Morgan 11.75

The process improvement category includes training, quality improvement, housekeeping, and other indirect tasks.
a.) Journalize the entry to record the factory labor costs for the week.
b.) assume that jobs 111 and 112 were completed but not sold during the week and that job 113 remained incomplete at the end of the week. How would the direct labor costs for all three jobs be reflected on the financial statements at the end of the week?



CLICK HERE TO GET THE ANSWER !!!!

Materials issued for the current month are as follows: Requisition No. Material Job No. Amount 811 ; Aluminum 511 $10,400 812 ; Steel 514 18,650 813 &n bsp; Plastic 526 875 814 &nb sp; Abrasives Indirect 325 815 Titanium Alloy 533 42,300 Journalize the entry to record the issuance of materials.

Ex19-4.) Materials issued for the current month are as follows:

Requisition No. Material Job No. Amount
811 ; Aluminum 511 $10,400
812 ; Steel 514 18,650
813 &n bsp; Plastic 526 875
814 &nb sp; Abrasives Indirect 325
815 Titanium Alloy 533 42,300

Journalize the entry to record the issuance of materials.



CLICK HERE TO GET THE ANSWER !!!!

The following information is available for the first month of operations of Korv Inc., a manufacturer and craft items:

EX19-2.) The following information is available for the first month of operations of Korv Inc., a manufacturer and craft items:

Sales &n bsp; $775,000
Gross profit 265,000
Indirect labor &nbs p; 63,000
Indirect materials 32,000
Other factory overhead & nbsp; 17,500
Materials purchased & nbsp; 303,000
Total manufacturing cost for the period 620,000
Materials, end of period 35,000

Using the above information, determine the following missing amounts:

a.) Cost
b.) Direct materials cost
c.) Direct labor cost



CLICK HERE TO GET THE ANSWER !!!!