Reference no: EM133099244

Question - Sonic Enterprises Inc has decided to purchase 100% of the voting shares of Jackson Inc. for $300,000 in cash on May 1, 2019. On the date, the balance sheets of each of these companies were as follows:

	Sonic Inc	Jackson Inc
Cash and Short-Term Securities	$750,000	$30,000
Inventory	$60,000	$20,000
Plant and Equipment (net)	$280,000	$140,000
Total Assets	$1,090,000	$190,000
Current Liabilities	$150,000	$25,000
Bonds Payable	$120,000	$30,000
Common Shares	$120,000	$70,000
Retained Earnings	$700,000	$65,000
Total Liabilities and Equity	$1,090,000	$190,000

On that date, the fair values of Jackson's assets and liabilities were as follows:

Cash and Short-Term Securities	$40,000
Inventory	$15,000
Plant and Equipment (net)	$250,000
Current Liabilities	$25,000
Bonds Payable	$25,000

Sonic's Book Values approximated their Fair Values on that date.

Required -

a) Calculate the amount of Goodwill arising from this combination.

b) Prepare the journal entry to record Sonic's acquisition of Jackson's Shares.

c) Prepare Sonic's Consolidated Balance Sheet immediately following its acquisition of Jackson's assets.