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

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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This question was answered on: Oct 15, 2019

Solution~000.zip (25.37 KB)

STATUS

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Approved

Oct 15, 2019

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