Prepare the journal entry on the books of Paru Company

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Question - On January 1, 2020, Paru Company purchased 100% of the common stock of Safe Company by issuing 40,000 shares of its (Paru's) $10 par value common stock with a market price of $17.50 per share. Paru incurred cash expenses of $20,000 for registering and issuing the common stock. The stockholders' equity section of the two companies' balance sheets on December 31, 2018, were:

 

Paru

Safe

Common stock, $10 par value

$350,000

$320,000

Other contributed capital

$590,000

$175,000

Retained earnings

$380,000

$205,000

Prepare the journal entry on the books of Paru Company to record the purchase of the common stock of Safe Company and related expenses.

Reference no: EM133088791

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