Condensed Balance Sheets for Rich Company and Jordan Company on January

question 36

Essay

Condensed balance sheets for Rich Company and Jordan Company on January 1,2016 are as follows:
On January 1,2016 the stockholders of Rich and Jordan agreed to a consolidation whereby a new corporation,Cannon Company,would be formed to consolidate Rich and Jordan.Cannon Company issued 70,000 shares of its $20 par value common stock for the net assets of Rich and Jordan.On the date of consolidation,the fair values of Rich's and Jordan's current assets and liabilities were equal to their book values.The fair value of plant and equipment for each company was: Rich,$1,270,000; Jordan,$360,000.
An investment banking house estimated that the fair value of Cannon Company's common stock was $35 per share.Rich will incur $45,000 of direct acquisition costs and $15,000 in stock issue costs.
Required:
Prepare the journal entries to record the consolidation on the books of Cannon Company assuming that the consolidation is accounted for as an acquisition.

---

Definitions:

Religious People

Refers to individuals who follow and practice a specific set of beliefs, rituals, and moral codes based on the teachings of a religion.

Symbolic Immortality

The concept of achieving a sense of perpetuity beyond one's death through contributions to society, remembrance by others, or through creations or offspring.

Near-Death Experience

A profound psychological event that may occur to a person close to death or in situations of intense physical or emotional pain, often characterized by visions and a sense of detachment from the body.

Moody

Subject to or indicative of frequent changes in mood or temperament.