Prepare journal entrie on zintel book to record combination

Assignment Help Financial Accounting

Reference no: EM135922

Purchase Effective 31^st December, 2010, Zintel Corporation proposes to issue extra shares of its common stock in exchange for all the liabilities and assets of Smith Corporation and Platz Corporation, after which Platz and Smith will distribute the Zintel stock to their stockholders in do liquidation and dissolution. Balance sheets of each of the corporation's immediately prior to merger on 31^st December, 2010, follow. The common stock exchange ratio was negotiated to be 1:1 for both Platz and Smith.

Zintel Smith Platz existing assets $1,600,000 $ 350,000 $ 12,000

Long-term assets (net) 5,700,000 1,890,000 98,000

Total $7,300,000 $2,240,000 $110,000

Current liabilities $700,000 $110,000 $9,000

Long-term debt 1,100,000 430,000 61,000

Common stock, $5 par value 2,500,000 700,000 20,000

Retained earnings 3,000,000 1,000,000 20,000

Total $7,300,000 $2,240,000 $110,000

Required:

Organize journal entries on Zintel's books to record the combination. Suppose the following: The identifiable assets and liabilities of Platz and Smith are all reflected in the balance sheets, and their recorded amounts are same to their current fair values except for long-term assets. The fair value of Smith's long-term assets exceeds their book value by $20,000, and the fair value of Platz's long-term assets exceeds their book values by $5,000. Zintel's common stock is traded dynamically and has a current market price of $15 per share. Prepare journal entries on Zintel's books to record the combination.

Reference no: EM135922

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