On January 2, 2023 Green Corporation enters into a business combination with Bay Corporation in which Bay
Corporation is dissolved. Green pays $3,000,000 for Bay, the consideration with 100,000 shares of $10 par
common stock with market value of $50 per share. In Addition, Green pays the following expenses in cash at the
time of the merger:
Registering and Issuing the
Security
100,000
Other Costs of Combination
200,000
Green
Bay
Book Value
Book Value Fair Value
Cash
6,000
280
280
Accounts receivable-net
2,600
720
720
Nots receivable-net
3,000
600
600
Inventories
5,000
840
1,000
Other current assets
1,400
360
400
Land
4,000
200
400
Buildings-net
18,000
1,200
2,000
Equipment-net
20,000
1,600
1.200
Total assets
60,000
5,800
6,600
Accounts payable
2,000
600
600
Mortgage payable-10%
10,000
1,400
1,200
Capital stock, $10 par
20,000
2,000
Other paid in capital
16,000
1,200
Retained earnings
12,000
800
Total equities
60,000
6,000-
Required
1. Prepare journal entries for Green Corporation to record its acquisition of Bay Corporation.
2. Prepare a balance sheet for Green Corporation on January 2, 2023, immediately after the merger, assuming the merger is treated as an acquisition.
