Acc407 Advanced Accounting: Week 1 Assignment (E16-8 and P1-27)

Acc407 Advanced Accounting
Week 1 Assignment (E16-8 and P1-27)

E16-8 Cash Distribution Plan
Adams, Peters, and Blake share profits and losses for their APB Partnership in a ratio of 2:3:5. When they decide to liquidate, the balance sheet is as follows:
ASSETS LIABILITIES AND EQUITIES
Cash 40,000 Liabilites 50,000
Adams, Loan 10,000 Adams, Capital 55,000
Other Assets 200,000 Peters, Capital 75,000
Blake, Capital 70,000
Total Assets 250,000 Total Liabilities and Equities 250,000
Liquidation expenses are expected to be negligible. No interest accrues on loans with partners after termination of the business.

Required
Prepare a cash distribution plan for the APB Partnership.

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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