Transcribed Image Text: Purchase at More than Book Value Ramrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January1 20X2, in exchange

Transcribed Image Text: Purchase at More than Book Value
Ramrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January1
20X2, in exchange for 4,000 shares of Ramrod’s $20 par value common stock. Balance sheet data
for both companies just before the merger are given as follows:
Stafford Industries
Ramrod Manufacturing
Book Value
Fair Value
Fair Value
Balance Sheet Items
Book Value
$ 30,000
60,000
160,000
30,000
350,000
$ 30,000
60,000
100,000
40,000
400,000
(150,000)
$ 480,000
$ 10,000
150,000
$ 70,000
100,000
200,000
50,000
600,000
(250,000)
$770,000
70,000
100,000
375,000
80,000
540,000
Cash
Accounts Receivable
Inventory
Land
Buildings & Equipment
Less: Accumulated Depreciation
}
$630,000
$ 10,000
145,000
Total Assets
$1,165,000
Accounts Payable
Bonds Payable
Common Stock:
$ 50,000
300,000
$ 50,000
310,000
200,000
$20 par value
$5 par value
Additional Paid-In Capital
Retained Earnings
100,000
20,000
40,000
180,000
$770,000
200,000
$ 480,000
Total Liabilities & Equities
%$4
Ramrod shares were selling for $150 on
date of acquisition.
Required
Prepare the following:
a. Journal entries to record the acquisition on Ramrod’s books.
b. A balance sheet for the combined enterprise immediately following the business combination.

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