Reference no: EM132076026

Question: Mendol Corporation purchased 100% of the common stock of Carbury Inc. on January 2, 2014. Carnac's balance sheet on January 2, 2014 was as follows:

Accounts receivable-net	$180,000	Current liabilities	$70,000
Inventory	360,000	Long term debt	160,000
Land	40,000	Common stock ($1 par)	20,000
Building-net	60,000	Paid-in capital	430,000
Equipment-net	80,000	Retained earnings	40,000
Total Assets	$720,000	Total Liabilities & Equity	$720,000

Fair values agree with book values except for inventory, land, and equipment that have fair values of $400,000, $50,000 and $70,000, respectively. Carbury has unrecorded patent rights valued at $20,000.

Required:

a. Prepare a schedule to allocate the purchase price to Carbury's assets and liabilities assuming Mendol paid $560,000 cash for the acquisition.

b. Prepare the consolidation worksheet with entries for a January 2, 2014 consolidated balance sheet.