Exercise 1

1. General journal entry recorded by Bison for the acquisition of Deer (Deer survives as a separate legal entity):

Investment in Deer 1,900,000

Common stock 500,000

Paid-in capital 1,400,000

Direct cost 10,000

Paid-in capital 15,000

Cash 25,000

2. General journal entry recorded by Bison for the acquisition of Deer (Deer dissolves as a separate legal entity):

Cash 120,000

Inventories 400,000

Other current assets 500,000

Land 250,000

Plant assets 1,500,000

Goodwill 90,000

Accounts payable 300,000

Notes payable 660,000

Common stock 500,000

Paid-in capital 1,400,000

Direct cost 10,000

Paid-in capital 15,000

Cash 25,000

Exercise 2

1. General journal entry recorded by Altamira for the acquisition of Lascaux (Lascaux survives as a separate legal entity):

Investment in Lascaux 960,000

Common stock 160,000

Paid-in capital 800,000

 Direct cost 5,000

Paid-in capital 10,000

Cash 15,000

2. General journal entry recorded by Altamira for the acquisition of Lascaux (Lascaux dissolves as a separate legal entity):

Cash 60,000

Inventories 200,000

Other current assets 250,000

Land 125,000

Plant assets 750,000

Goodwill 60,000

Accounts payable 155,000

Notes payable 330,000

Common stock 160,000

Paid-in capital 800,000

Direct cost 5,000

Paid-in capital 10,000

Cash 15,000

Exercise 3

General journal entry for the purchase of Carnac's net assets:

Accounts receivable 90,000

Inventory 200,000

Land 25,000

Building 30,000

Equipment 35,000

Patent 10,000

Goodwill 5,000

Current liabilities 35,000

Long-term debt 80,000

Cash 280,000
 Direct cost 10,000

Cash 10,000

Exercise 4

The stockholders' equity section for Palisade Corporation subsequent to its acquisition of Salisbury Corporation on January 1,
2005 will appear as follows:

Palisade Corporation

Balance Sheet

January 1, 2005

Current Assets $ 310,000

Equipment-net 920,000

Buildings-net 800,000

Land 350,000

Goodwill 270,000

Total Assets $2,650,000

Current Liabilities 220,000

Common Stock, $5 par 1,150,000

Paid-in Capital 1,130,000

Retained Earnings 150,000

Total Liabilities and Stockholders' equity $2,650,000

Exercise 5

General journal entry for the purchase of Sublime's net assets:

Accounts receivable 180,000

Inventory 200,000

Land 25,000

Building-net 30,000

Equipment-net 35,000

Patent rights 10,000

Current liabilities 25,000

Long-term debt 90,000

Cash 320,000
 Gain on bargain purchase 45,000

Direct cost 5,000

Cash 5,000

Exercise 6

Tennessee Corporation

Balance Sheet

January 1, 2005

Assets: Liabilities:

Cash $ 245,000 Accounts payable $1,300,000

Inventory 720,000 Notes payable 1,960,000

Other current assets 1,000,000 Total liabilities 3,260,000

Total current assets 1,965,000

Land 600,000 Equity:

Plant assets-net 5,500,000 Common stock ($5 par) 2,500,000

Goodwill 90,000 Paid-in capital 2,385,000

Total L.T. assets 6,190,000 Retained earnings 20,000

Income Summary (10,000)

Total equity 4,905,000

Total assets $ 8,155,000 Total liab.& eq. $8,155,000

Exercise 7

1. 560,000

2. 130,000