On July 1, 2014, Brigham Corporation purchased Young Company by paying $255,000

Question

On July 1, 2014, Brigham Corporation purchased Young Company by paying $255,000 cash and issuing a $150,480 note payable to Steve Young. At July 1, 2014, the balance sheet of Young Company was as follows.

$50,160

$204,570

89,890

235,990

103,180

$440,560

40,270

75,460

70,460

11,140

$440,560

The recorded amounts all approximate current values except for land (fair value of $80,380), inventory (fair value of $125,990), and trademarks (fair value of $17,016).

Prepare the July 1 entry for Brigham Corporation to record the purchase.

Cash

$50,160

Accounts payable

$204,570

Accounts receivable

89,890

Stockholders’ equity

235,990

Inventory

103,180

$440,560

Land

40,270

Buildings (net)

75,460

Equipment (net)

70,460

Trademarks

11,140

$440,560

Explanation / Answer

Debit Credit Investment in Young Company 405480 Cash 255000 Notes payable 150480 Cash 50160 Accounts Receivables 89890 Inventory 125990 Land 80380 Buildings 75460 Equipment 70460 Trademarks 17016 Goodwill(Balancing figure) 336684 A/P 204570 Stock holders' Equity 235990 Investment in Young Company 405480

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