Acc407 Advanced Accounting: P1-27 On January 1, 20X2, Frost Company acquired all of TKK

Acc407 Advanced Accounting

P1-27 Journal Entries to Record a Business Combination
On January 1, 20X2, Frost Company acquired all of TKK corporation's assets and liabilities by issuing 24,000 shares of its $4 par value common stock. At this date, Frost shares were selling at $22 per share. Historical cost and fair value balance sheet data for TKK at the time of acquisition were as follows:
Balance Sheet Item Historical Cost Fair Value
Cash & Receivables 28,000 28,000
Inventory 94,000 122,000
Buildings & Equipment 600,000 470,000
Less: Acc Depreciation (240,000)
Total Assets 482,000 620,000

Accounts Payable 41,000 41,000
Notes payable 65,000 63,000
Common stock ($10 par value) 160,000
Retained Earnings 216,000
Total Liab & Equities 482,000

Frost paid legal fees for the transfer of assets and liabilities of $14,000, audit fee of $21,000 and listing application fees for the new shares of $7,000.

Required:
Prepare the journal entries made by Frost to record the business combination.
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