| Real Estate and Buildings | Plant | Cash | Bills Receivable | Horses, Wagons and Harness | Office Furniture | Total | |
|---|---|---|---|---|---|---|---|
| Smith | $680,000 | $390,000 | $15,000 | $10,000 | $4,000 | $1,000 | $1,100,000 |
| Young | 327,000 | 160,000 | 3,000 | 6,000 | 3,000 | 1,000 | 500,000 |
| Star | 126,000 | 71,000 | 1,000 | 1,500 | 500 | 200,000 | |
| Total Appraised Value | $1,800,000 | ||||||
On this valuation, the Universal Brewing Corporation issued $2,000,000 of stock, shares $100 each, which was divided pro rata among the old companies on the basis of their appraised value, no fractional shares of stock to be issued, odd amounts to be paid old companies in cash.
Give journal entries necessary to set up property accounts and credit old companies with their pro rata on books of the new company.
At the time of the consolidation the ledger accounts of the Star Brewery were as follows:
| Real Estate and Buildings | $250,000.00 | Capital Stock | $400,000.00 |
| Plant | 247,000.00 | Bills Payable | 50,000.00 |
| Cash | 1,000.00 | Accounts Payable | 51,000.00 |
| Horses, Wagons, and Harness | 1,800.00 | ||
| Office Furniture | 1,200.00 | ||
| $501,000.00 | $501,000.00 | ||
Make the proper journal entries to liquidate in stock of the new company the liabilities other than capital stock, to apportion the remaining stock and cash, and to close the books of the Star Brewery.
33. The Elton Manufacturing Co. and the Star Manufacturing Co. were engaged in manufacturing the same kind of goods. To avoid the losses due to competition, the two companies decided to combine their plants into one corporation under the name of the Union Manufacturing Co. and finally agreed upon the following plan for the merger:
The assets received from, and the liabilities assumed for, the separate companies were taken at the values given in the respective balance sheets, subject to the following adjustments: the buildings, machinery, and patents at 90% of their stated value; delivery equipment, and furniture and fixtures at 80% of their value. A reserve of 2% on accounts receivable was established by the Star Manufacturing Co.
Elton Manufacturing Co.
Balance Sheet, June 30, 1918
| Land | $10,000.00 | Accounts Payable | $ 30,000.00 |
| Buildings | 60,000.00 | Mortgage Payable | 14,000.00 |
| Machinery and Tools | 30,000.00 | Accrued Wages | 1,500.00 |
| Delivery Equipment | 3,500.00 | Reserve for Bad Debts | 1,500.00 |
| Furniture and Fixtures | 1,500.00 | Stock, Capital | 100,000.00 |
| Inventory, Materials | 10,000.00 | Surplus | 10,000.00 |
| Finished Goods | 2,500.00 | ||
| Accounts Receivable | 35,000.00 | ||
| Unexpired Insurance | 500.00 | ||
| Cash | 4,000.00 | ||
| $157,000.00 | $157,000.00 | ||