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Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. Padre Company Sol Company Book Values

Following are preacquisition financial balances for PadreCompany and Sol Company as of December 31. Also included are fairvalues for Sol Company accounts.

  Padre
Company

Sol Company

  Book Values Book Values Fair Values
  12/31 12/31 12/31
Cash   $ 571,500       $ 52,250       $ 52,250    
Receivables     235,500         350,000         350,000    
Inventory     425,000         250,000         307,800    
Land     602,500         216,000         188,900    
Building and equipment (net)     632,500         365,000         429,300    
Franchise agreements     312,000         256,000         286,000    
Accounts payable     (333,000 )       (141,000 )       (141,000 )  
Accrued expenses     (157,000 )       (52,250 )       (52,250 )  
Long-term liabilities     (957,500 )       (725,000 )       (725,000 )  
Common stock—$20 par value     (660,000 )                      
Common stock—$5 par value               (210,000 )            
Additional paid-in capital     (70,000 )       (90,000 )            
Retained earnings, 1/1     (557,500 )       (244,000 )            
Revenues     (990,000 )       (411,000 )            
Expenses     946,000         384,000              
 

Note: Parentheses indicate a credit balance.

On December 31, Padre acquires Sol’s outstanding stock by paying$127,500 in cash and issuing 16,400 shares of its own common stockwith a fair value of $40 per share. Padre paid legal and accountingfees of $21,500 as well as $6,800 in stock issuance costs.

Determine the value that would be shown in Padre’s consolidatedfinancial statements for each of the accounts listed.

Accounts

  Amounts
Inventory $732,800
Land $791,400
Buildings and equipment $1,061,800
Franchise agreements $598,000
Goodwill $87,500
Revenues $990,000
Additional paid-in capital $391,200
Expenses $967,500
Retained earnings, 1/1 $557,500
Retained earnings, 12/31???

Aug 16 2021 View more View Less

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