BUSINESS

COMBINATION
PRELIM EXAMINATION
 Requirements
The total additional paid in capital reported in the
combined balance sheet. 13
The total amount of retained earnings reported in the
combined balance sheet.
14
The total stockholders’ equity reported in the combined
balance sheet. 15
What is the journal entry to record the acquisition.
16
What is the journal entry to record the acquisition
expense.
17
 The total additional paid in
capital reported in the combined
balance sheet.

Additional Paid in Capital of Pure 240,000

Additional Paid in Capital 630,000
Additional Paid in Capital (Cost Acquisition) (29,800)
Total Additional Paid in Capital 840,200
 The total amount of retained
earnings reported in the
combined balance sheet.

Retained Earnings of Pure 264,000

Retained Earnings (Acquisition Exp.) (102,000)
Total Retained Earnings 162,000

The total stockholder’s

equity reported in the
combined balance sheet.
Common Stock 1,170,000
Additional Paid in Capital 840,200
Retained Earnings 162,000
Stockholder’s Equity 2,172,000
Journal Entry to record
the Acquisition.
Cash 24,000
Receivable, net 48,000
Inventories 82,000
Land 280,000
Building 320,000
Equipment 150,000
In-Process Research & Development 60,000
Goodwill 546,000
Accounts Payable 72,000
Notes Payable 190,000
Other liabilities 168,000
Common Stock 450,000
Additional Paid in Capital 630,000
 Journal Entry to record
the Acquisition Expense
Acquisition Related Expense (RE) 76,000
Cash 76,000
Acquisition related cost-Direct Cost

Additional Paid in Capital 29,800

Cash 29,800
Acquisition related cost-Cost to issue and register stocks.

Acquisition Related Expense (RE) 26,000

Cash 26,000
Acquisition related cost-Indirect Cost
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