Question

During the current year, Brewer Company acquired all of the outstanding common stock of Miller Inc. paying $11,800,000 cash. The book values and fair values of Miller's assets and liabilities acquired are listed below: Book Value Fair Value Accounts receivable $ 1,700,000 $ 1,525,000 Inventories 2,500,000 3,800,000 Property, plant, and equipment 8,800,000 11,425,000 Accounts payable 2,800,000 2,800,000 Bonds payable 4,300,000 3,925,000 Required: Prepare the journal entry to record the acquisition by Brewer Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

The journal entry is shown below:

Step-by-step explanation:

The journal entry is shown below:

Accounts receivable 1,525,000

Inventories 3,800,000

Property plant equipment 11,425,000

Goodwill on acquisition 1,775,000 (Balancing figure)

To accounts payable $2,800,000

To bonds payable $3,925,000

To Cash $11,800,000

(Being the acquisition is recorded)

We debited the all assets items and credited the all liabilities item plus the cash account is also credited as the cash is paid which decreased the assets and the balancing figure would be transferred to the goodwill account