Acme Report Financial Statements Assignment Help With Solution

Acme Report Financial Statements Assignment Help

1.Acme Corporation (a U.S. company located in Sarasota, Florida) has the following import/export transactions in 2011:

March 1- Bought inventory costing 50,000 pesos on credit.

May 1- Sold 60 percent of the inventory for 45,000 pesos on credit.

August 1- Collected 40,000 pesos from customers.

September 1- Paid 30,000 pesos to creditors

Currency exchange rates for 1 peso for 2011 are as follows:

March 1- $0.17

May 1- 0.18

August 1- 0.19

September 1- 0.20

December 31- 0.21

For each of the following accounts, how much will Acme report on its 2011 financial statements?

a.Inventory.

b.Cost of Goods Sold.

c.Sales.

d.Accounts Receivable.

e.Accounts Payable.

f.Cash.

2.Anchor Corporation paid cash of $178,000 to acquire Zink Company’s net assets on February 1, 20X3. The balance sheet data for the two companies and fair value information for Zink immediately before the business combination were:

	Anchor Corporation	Zink Company
Balance Sheet Item	Book Value	Book Value	Fair Value
Cash	$ 240,000	$ 20,000	$ 20,000
Accounts Receivable	140,000	35,000	35,000
Inventory	170,000	30,000	50,000
Patents	80,000	40,000	60,000
Buildings & Equipment	380,000	310,000	150,000
Less: Accumulated Depreciation	(190,000)	(200,000)
Total Assets	$ 820,000	$ 235,000	$315,000
Accounts Payable	$ 85,000	$ 55,000	$ 55,000
Notes Payable	150,000	120,000	120,000
Common Stock:
$10 par value	200,000
$6 par value		18,000
Additional Paid-In Capital	160,000	10,000
Retained Earnings	225,000	32,000
Total Liabilities & Equities	$ 820,000	$ 235,000

Required:

a. Give the journal entry recorded by Anchor Corporation when it acquired Zink’s net assets.

b. Prepare a balance sheet for Anchor immediately following the acquisition.

c. Give the journal entry to be recorded by Anchor if it acquires all of Zink’s common stock (instead of Zink’s net assets) for $178,000.

3.On January 1, 20X2, Frost Company acquired all of TKK Corporation’s assets and liabilities by issuing 24,000 shares of its $4 par value common stock. At that date, Frost shares were selling at $22 per share. Historical cost and fair value balance sheet data for TKK at the time of acquisition were as follows:

Balance Sheet Item	Historical Cost	Fair Value
Cash & Receivables	$ 28,000	$ 28,000
Inventory	94,000	122,000
Buildings & Equipment	600,000	470,000
Less: Accumulated Depreciation	(240,000)
Total Assets	$ 482,000	$620,000
Accounts Payable	$ 41,000	$ 41,000
Notes Payable	65,000	63,000
Common Stock ($10 par value)	160,000
Retained Earnings	216,000
Total Liabilities & Equities	$ 482,000

Frost paid legal fees for the transfer of assets and liabilities of $14,000. Frost also paid audit fees of $21,000 and listing application fees of $7,000, both related to the issuance of new shares.

Required:

Prepare the journal entries made by Frost to record the business combination.

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4.On January 1, 20X3, PURE Products Corporation issued 12,000 shares of its $10 par value stock to acquire the net assets of Light Steel Company. Underlying book value and fair value information for the balance sheet items of Light Steel at the time of acquisition follow:

Balance Sheet Item	Book Value	Fair Value
Cash	$ 60,000	$ 60,000
Accounts Receivable	100,000	100,000
Inventory (LIFO basis)	60,000	115,000
Land	50,000	70,000
Buildings & Equipment	400,000	350,000
Less: Accumulated Depreciation	(150,000)	—
Total Assets	$ 520,000	$695,000
Accounts Payable	$ 10,000	$ 10,000
Bonds Payable	200,000	180,000
Common Stock ($5 par value)	150,000
Additional Paid-In Capital	70,000
Retained Earnings	90,000
Total Liabilities & Equities	$ 520,000

Light Steel shares were selling at $18 and PURE Products shares were selling at $50 just before the merger announcement. Additional cash payments made by PURE Products in completing the acquisition were:

Finder’s fee paid to firm that located Light Steel	$10,000
Audit fee for stock issued by PURE Products	3,000
Stock registration fee for new shares of PURE Products	5,000
Legal fees paid to assist in transfer of net assets	9,000
Cost of SEC registration of PURE Products shares	1,000

Required:

Prepare all journal entries to record the business combination on PURE Products’ books.

5.The following balance sheets were prepared for Adam Corporation and Best Company on January 1, 20X2, just before they entered into a business combination:

	Adam Corporation			Best Company
Item	Book Value	Fair Value	Book Value		Fair Value
Cash & Receivables	$150,000	$150,000	$ 90,000		$ 90,000
Inventory	300,000	380,000	70,000		160,000
Buildings & Equipment	600,000	430,000	250,000		240,000
Less: Accumulated Depreciation	(250,000)		(80,000)
Total Assets	$800,000	$960,000	$330,000		$490,000
Accounts Payable	$ 75,000	$ 75,000	$ 50,000		$ 50,000
Notes Payable	200,000	215,000	30,000		35,000
Common Stock:
$8 par value	180,000
$6 par value			90,000
Additional Paid-In Capital	140,000		55,000
Retained Earnings	205,000		105,000
Total Liabilities & Equities	$800,000		$330,000

Adam acquired all of Best Company’s assets and liabilities on January 1, 20X2, in exchange for its common shares. Adam issued 8,000 shares of stock to complete the business combination.

Required:

Prepare a balance sheet of the combined company immediately following the acquisition, assuming Adam’s shares were trading at $60 each.

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