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:

PINNACLE COMPANY AND CONSOLIDATED SUBSIDIARY STRATA Worksheet for a Consolidated Balance Sheet January 1, 2013
Accounts	Pinnacle			Strata			Adjust. & Elim.				Consolidated
Cash		433,000			122,000						555,000
Accounts receivable		1,210,000			283,000						1,493,000
Inventory		1,235,000			350,000						1,585,000
Investment in Strata		3,200,000			0				(S)	2,600,000
									(A)	600,000	0
Buildings (net)		5,572,000			1,845,000		(A)	300,000			7,717,000
Licensing agreements		0			3,000,000				(A)	100,000	2,900,000
Goodwill		350,000			0		(A)	400,000			750,000
Total assets		12,000,000			5,600,000						15,000,000
Accounts payable		(300,000	)		(375,000	)					(675,000)
Long-term debt		(2,700,000	)		(2,625,000	)					(5,325,000)
Common stock		(3,000,000	)		(1,000,000	)	(S)	1,000,000			(3,000,000)
Additional paid-in capital		0			(500,000	)	(S)	500,000			0
Retained earnings		(6,000,000	)		(1,100,000	)	(S)	1,100,000			(6,000,000)
Total liabilities and equities		(12,000,000	)		(5,600,000	)		3,300,000		3,300,000	(15,000,000)

The consolidation entries are designed to:

•	Eliminate the stockholders’ equity accounts of the subsidiary (S)
•	Record all subsidiary assets and liabilities at fair value (A)
•	Recognize the goodwill indicated by the acquisition fair value (A)
•	Eliminate the Investment in Strata (S, A)

 

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

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?

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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.

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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



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