Question

Which of the following accounting entries would be appropriate when recording the acquisition of Westmont Company with no issuance of common stock?

A) Debit Cash, Credit Common Stock
B) Debit Goodwill, Credit Cash
C) Debit Assets, Credit Liabilities
D) Debit Retained Earnings, Credit Dividends

Answer 1

The appropriate accounting entry for the acquisition of Westmont Company with no issuance of common stock is to Debit Assets and Credit Liabilities.

Step-by-step explanation:

The appropriate accounting entry for the acquisition of Westmont Company with no issuance of common stock would be option C) Debit Assets, Credit Liabilities.

When a company acquires another company, it needs to record the assets it receives and the liabilities it assumes. Debiting assets increases the company's asset accounts, while crediting liabilities increases the company's liability accounts.

This entry reflects the transfer of ownership and the recognition of the acquired company's assets and liabilities on the acquiring company's financial statements.