Presented Below Are the Balance Sheets of Blanco,Inc On January 1,2X13,Stalle Company Acquired 70% of the Outstanding Common

question 1

Multiple Choice

Presented below are the balance sheets of Blanco,Inc.and Stalle Company at January 1,2X13: $\begin{array}{l}\begin{array} { l } &&\text { Blanco, Inc} & &\text { Stalle Company}\\&&\text { Balance Sheet} & &\text { Balance Sheet}\\&&\text { january 1, 2X13} & &\text { january \( 1,2 \times 13 \) }\\\end{array}\\\begin{array} { l } \text { Cash } & \$ 35 \\\text { Net Fixed Assets } &265\\\text { Total Assets } & \$ 300\\\end{array}\begin{array} { l } \text { Cash } & \$250 \\\text { Net Fixed Assets } & \underline{450} \\\text { Total Assets } & \$ 700 \\\end{array}\end{array}$
$\begin{array}{llll}\text { Accounts Payable } & \$ 30 & \text { Accounts Payable } & \$ 90 \\\text { Long-term Bonds Pay. } & 100 & \text { Long-term Bonds Pay. } & 200 \\\text { Stockholders' Equity } & \underline{170} & \text { Equity } & \underline{410} \\ \text { Total Liab. \& Equity } & \$ 300 & \text { Total Liab. \& Equity } & \$ 700 \\\end{array}$ On January 1,2X13,Stalle Company acquired 70% of the outstanding common stock of Blanco,Inc.,for $119 in cash.Assume the book value of Blanco's assets and liabilities equals the market value.
What journal entry will Blanco,Inc.make on January 1,2X13?

• A)\(\begin{array}{lcc}
• \text { Cash } & 119 & \\
• \quad \text { Common Stock } & &119 & \\
• \end{array}\)
• B)\(\begin{array}{lccc}
• \text { Cash } & 119 \\
• \quad \text { Investment by Stalle Co. } & &119 & \\
• \end{array}\)
• C)\(\begin{array}{lccc}
• \text { Cash } &119 \\
• \text { Treasury Stock } & &119 & \\
• \end{array}\)
• D) \(\begin{array}{lccc}
• \text { Cash } & 119 & \\
• \text { Accounts Payable } & 21& \\
• \text { Long-term Bonds Payable } & 70& \\
• \quad \text { Fixed Assets } & &186 \\
• \text { Cash }& & 24
• \end{array}\)
• E)No journal entry is necessary.

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Definitions:

Competitive Firms

Companies that operate in a market where there are many buyers and sellers, such that no single entity can dictate the market price of goods and services.

Price

The monetary value that must be paid to secure a good or service.

Product

Anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

Total Revenues

The total income generated from the sale of goods or services before any costs are subtracted.