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(Solved) PROBLEM 3: PROBLEM 2: GAGA AND BIEBER COMPANIES HAVE THE


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PROBLEM 3:

 

PROBLEM 2: GAGA AND BIEBER COMPANIES HAVE THE FOLLOWING BALANCE

 

SHEETS ON JANUARY 1, 2016

 


 

GAGA

 


 

BIEBER

 


 

CASH

 


 

10,000,000

 


 

500,000

 


 

A/R

 


 

5,000,000

 


 

200,000

 


 

EQUIPMENT

 


 

10,000,000

 


 

1,000,000

 


 

A/D EQUIPMENT

 


 

1,000,000

 


 

100,000

 


 

LAND

 


 

1,000,000

 


 

200,000

 


 

TOTAL ASSETS

 


 

25,000,000

 


 

1,800,000

 


 

NOTE PAYABLE

 


 

5,000,000

 


 

800,000

 


 

COMMON STOCK

 


 

10,000,000

 


 

600,000

 


 

RETAINED EARNINGS

 


 

10,000,000

 


 

400,000

 


 

ON JANUARY 2ND GAGA ACQUIRED 80% OF THE OUTSTANDING STOCK OF BIEBER

 

COMPANY FROM BIEBER?S STOCKHOLDERS BY ISSUING 500,000 SHARES OF GAGA

 

STOCK WHEN GAGA HAD A MARKET VALUE OF $5 PER SHARE. ON JANUARY 2ND

 

THE FAIR MARKET VALUE OF BIEBER?S EQUIPMENT WAS $1,100,000 AND THE FAIR

 

MARKET VALUE OF BIEBER?S LAND WAS $50,000. BIEBER WILL CONTINUE TO

 

EXIST AFTER THIS ACQUISITION.

 


 

REQUIRED:

 


 

A) MAKE THE JOURNAL ENTRY GAGA MAKES WHEN IT ACQUIRES 80% OF THE

 

STOCK OF BIEBER BY ISSUING ITS 500,000 SHARES

 

B) MAKE THE JOURNAL ENTRY BIEBER MAKES WHEN ITS STOCKHOLDERS SELL

 

80% OF THEIR STOCK TO GAGA FOR GAGA STOCK

 

C) PREPARE A CONSOLIDATED BALANCE SHEET ON JANUARY 3RD

 

D) PREPARE ANY NECESSARY WORKSHEET ENTRIES NEEDED TO CONSTRUCT

 

THE CONSOLIDATED BALANCE SHEET

 


 

 


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DATE ANSWERED

Oct 15, 2019

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