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On July 1, 2020, Ayayai Corporation purchased Young Company by paying $257,800 cash and issuing a $139,000 note payable to Steve Young

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On July 1, 2020, Ayayai Corporation purchased Young Company by paying $257,800 cash and issuing a $139,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.

 

Cash $51,600 Accounts payable $207,000

Accounts receivable 89,700 Stockholders' equity 238,700

Inventory 106,000 $445,700

Land 40,600

Buildings (net) 75,600

Equipment (net) 71,000

Trademarks 11,200

$445,700

 

The recorded amounts all approximate current values except for land (fair value of $64,500), inventory (fair value of $125,100), and trademarks (fair value of $15,120).

 

(a)

 

   

Prepare the July 1 entry for Ayayai Corporation to record the purchase. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

 

Account Titles and Explanation Debit Credit

Inventory 125,100

Accounts Receivable 89,700

Land 64,500

Buildings 75,600

Equipment 71,000

Cash 51,600

Trademarks 15,120

Goodwill 111,180

Cash 257,800

Accounts Payable 207,000

Notes Payable 139,000

 

 

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(b)

Prepare the December 31 entry for Ayayai Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $3,920. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

 

Account Titles and Explanation Debit Credit

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