E1-3
Prepare Stockholders equity section
The Stockholders equity of Pillow Corporation at January 1 were as follows (in thousands):
Prepare Stockholders equity section
The Stockholders equity of Pillow Corporation at January 1 were as follows (in thousands):
Pillow Sleep-bank |
Capital Stock , $10 par $ 1,500 $ 800 |
Other paid in capital 200 400 |
Retained Earnings 600 300 |
Stockholders Equity $ 2,300 $ 1,500 |
On January 2, Pillow
issued 150,000 of it’s share with a market value of $20 per share for all of
Sleep-bank’s share, and sleep bank was disolved. On the same day, pillow paid $
5,000 to register and issue the shares and $ 10,000 for other direct cost of
combination.
REQUIRED :
Prepare the stockholder’s equity section of Pillow Corporation’s balance sheet
immediately after the business combination on January 2.
Answer
Journal Entry :
a. Investment in Sleep-bank $ 3,000,000
a. Investment in Sleep-bank $ 3,000,000
Capital Stock, $ 10 par $
1,500,000
Additional Paid in Capital $
1,500,000
b. Investment Expense $ 10,000
Additional Paid in Capital $ 5,000
Cash $ 15,000
b. Investment Expense $ 10,000
Additional Paid in Capital $ 5,000
Cash $ 15,000
Stockholders Equity
Capital Stock $
3,000,000
Additional
Paid in Capital 1,695,000
Retained
Earnings 600,000
Total
Stockholders Equity $ 5,295,000
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