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Prepare journal entry on pell books to record business

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Reference no: EM133176314

Question - Balance sheet information for Seitz Corporation at January 1, 2011, is summarized as follows:

Current assets $920,000 Liabilities $1,200,000

Plant assets 1,800,000 Capital stock $10 par 800,000

Retained earnings 720,000

$2,720,000 $2,720,000

Seitz's assets and liabilities are fairly valued except for plant assets that are undervalued By $200,000. On January 2, 2011, Pell Corporation issues 80,000 shares of its $10 par Value common stock for all of Seitz's net assets and Seitz is dissolved. Market quotations for the two stocks on this date are:

Pell common: $28

Seitz common: $19

Pell pays the following fees and costs in connection with the combination:

Finder's fee $10,000

Costs of registering and issuing stock 5,000

Legal and accounting fees 6,000

Required -

1. Prepare the journal entry on Pell's books to record the business combination.

2. Show the computation to calculate goodwill.

Reference no: EM133176314

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