What journal entry will redstar corporation record

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Question

Supernova Company had the following summarized balance style="color:rgb(26,117,255);line-height:19.88px;">sheet on December 31, 20X1:

Assets

Accounts Receivable 200,000

Inventory 450,000

Property and plant (net) 600,000

Goodwill 150,000

Total 1,400,000

Liabilities and Equity

Notes Payable 600,000

Common stock, $5 par 300,000

Paid In Capital, Excess of par 400,000

Retained Earnings 100,000

Total 1,400,000

The fair value of the inventory and property and plant is 600,000 and 850,000 respectively

Assume that Redstar Corporation exchanges 45,000 of its $3 par value shares of common stock, when the fair price is $4/share, for 100% of the common stock of Supernova Company. Redstar incurred direct acquisition costs of 5,000 and stock issuance costs of 5,000

Required:

A. What journal entry will Redstar Corporation record for the investment in Supernova.

B. Prepare supporting determination and distribution of excess schedule.

C. Prepare Redstar's elimination and adjustment entry for the acquisition of Supernova.

Reference no: EM132321890

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