On July 1, 2015, Kroger Inc. acquired Hole Foods for $250,000 cash and a $100,00

Question

On July 1, 2015, Kroger Inc. acquired Hole Foods for $250,000 cash and a $100,000 note payable to the Bank of New York. The balance sheet on that date for Hole Foods is as follows:

Cash $50,000 Accounts Receivable $90,000 Inventory $100,000 Land $40,000 Buildings(net) $75,000 Equipment(net) $70,000 Trademarks $10,000 TOTALS $435,000

Accounts Payable $200,000 Stockholder's Equity $235,000 TOTAL $435,000

The recorded amounts (book values) all approximate fair value except for Land (Fair Value is $60,000) Inventory (Fair Value is $125,000 and Trademarks (Fair Value $15,000)

Instructions: (PART 1)Prepare July 1 journal entry for Kroger Inc, to record the acquisition of Hole Foods.

(PART 2) supporting Data-Determine Goodwill in a table.

Please explain or show work..

Explanation / Answer

Answer:

Part 1 & 2:

Journal entry for Purchase

Account Title & Explantions In$ In$ Date

Journal entry for Purchase

Debit   Credit   01-Jul By Cash 50000 Accounts receivable 90000 Inventory (At Fair value) 125000 land (At Fair value) 60000 Buildings (net) 75000 Equipment (net) 70000 trademarks (At fair value) 15000 Good wiil (balancing Figure ) 65000 To Accounts payable 200000 To Cash (Purchase consideration paid ) 250000 To Notes payable 100000 (Being Business Purchased and Goodwill recorded on payment of cash & Notes payable )

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