Problem 1-6 (LO 3, 4) Cash purchase with goodwill. Tweeden Corporation is contemplating the acquisition of the net assets of Sylvester Corporation in anticipation of expanding its operations. The balance sheet of Sylvester Corporation on December 31, 2015, is as follows: Sylvester Corporation Balance Sheet December 31, 2015 Current assets: Current liabilities: Notes receivable $ 24,000 Accounts payable $ 45,000 Accounts receivable 56,000 Payroll and benefit-related liabilities 12,500 Inventory 31,000 Other current assets 18,000 Debt maturing in one year 10,000 Total current assets $129,000 Total current liabilities $ 67,500 Investments 65,000 Fixed assets: Other liabilities: Land $ 32,000 Long-term debt $248,000 Building 245,000 Payroll and benefit-related liabilities 156,000 Equipment 387,000 Total fixed assets 664,000 Total other liabilities 404,000 Intangibles: Stockholders’ equity: Goodwill $ 45,000 Common stock $100,000 Patents 23,000 Paid-in capital in excess of par 250,000 Trade names 10,000 Retained earnings 114,500 Total intangibles 78,000 Total equity 464,500 Total assets $936,000 Total liabilities and equity $936,000 An appraiser for Tweeden determined the fair values of Sylvester’s assets and liabilities to be as shown on next page. Assets Liabilities Notes receivable $ 24,000 Accounts payable $ 45,000 Accounts receivable 56,000 Payroll and benefit-related liabilities—current 12,500 Inventory 30,000 Other current assets 15,000 Debt maturing in one year 10,000 Investments 63,000 Land 55,000 Long-term debt 248,000 Building 275,000 Payroll and benefit-related liabilities—long-term 156,000 Equipment 426,000 Goodwill — Patents 20,000 Trade names 15,000 The agreed-upon purchase price is $580,000 in cash. Acquisition costs paid in cash total $20,000. Required Using the above information, do value analysis and prepare the entry on the books of Tweeden Corporation to acquire the net assets of Sylvester Corporation on December 31, 2015. Problem 1-5 (LO 3, 4) Revaluation of assets. Jack Company is a corporation that was organized on July 1, 2015. The June 30, 2020, balance sheet for Jack is as follows: Assets Investments $ 400,500 Accounts receivable $1,250,000 Allowance for doubtful accounts (300,000) 950,000 Inventory 1,500,000 Prepaid insurance 18,000 Land 58,000 Machinery and equipment (net) 1,473,500 Goodwill 100,000 Total assets $4,500,000 Liabilities and Equity Current liabilities $1,475,000 Common stock ($10 par) 1,200,000 Retained earnings 1,825,000 Total liabilities and equity $.

1. Problem 1-6 (LO 3, 4) Cash purchase with goodwill.
Tweeden Corporation is contemplating the acquisition of the net
assets of Sylvester Corporation in anticipation of expanding its
operations. The balance sheet of Sylvester Corporation on
December 31, 2015, is as follows:
Sylvester Corporation
Balance Sheet
December 31, 2015
Current assets:
Current liabilities:
Notes receivable
$ 24,000

2. Accounts payable
$ 45,000
Accounts receivable
56,000
Payroll and benefit-related liabilities
12,500
Inventory
31,000

3. Other current assets
18,000
Debt maturing in one year
10,000
Total current assets
$129,000

4. Total current liabilities
$ 67,500
Investments
65,000
Fixed assets:
Other liabilities:

5. Land
$ 32,000
Long-term debt
$248,000
Building
245,000
Payroll and benefit-related liabilities

6. 156,000
Equipment
387,000
Total fixed assets
664,000
Total other liabilities

7. 404,000
Intangibles:
Stockholders’ equity:
Goodwill
$ 45,000
Common stock
$100,000

8. Patents
23,000
Paid-in capital in excess of par
250,000
Trade names
10,000
Retained earnings
114,500
Total intangibles

9. 78,000
Total equity
464,500
Total assets
$936,000
Total liabilities and equity
$936,000
An appraiser for Tweeden determined the fair values of
Sylvester’s assets and liabilities to be as shown on next page.

10. Assets
Liabilities
Notes receivable
$ 24,000
Accounts payable
$ 45,000
Accounts receivable
56,000
Payroll and benefit-related liabilities—current
12,500
Inventory
30,000

11. Other current assets
15,000
Debt maturing in one year
10,000
Investments
63,000
Land
55,000
Long-term debt
248,000
Building

12. 275,000
Payroll and benefit-related liabilities—long-term
156,000
Equipment
426,000
Goodwill
—
Patents
20,000

13. Trade names
15,000
The agreed-upon purchase price is $580,000 in cash.
Acquisition costs paid in cash total $20,000.
Required
Using the above information, do value analysis and prepare the
entry on the books of Tweeden Corporation to acquire the net
assets of Sylvester Corporation on December 31, 2015.
Problem 1-5 (LO 3, 4) Revaluation of assets.
Jack Company is a corporation that was organized on July 1,
2015. The June 30, 2020, balance sheet for Jack is as follows:
Assets
Investments

14. $ 400,500
Accounts receivable
$1,250,000
Allowance for doubtful accounts
(300,000)
950,000
Inventory
1,500,000
Prepaid insurance
18,000

15. Land
58,000
Machinery and equipment (net)
1,473,500
Goodwill
100,000
Total assets
$4,500,000
Liabilities and Equity
Current liabilities

16. $1,475,000
Common stock ($10 par)
1,200,000
Retained earnings
1,825,000
Total liabilities and equity
$4,500,000
The experience of other companies over the last several years
indicates that the machinery and equipment can be sold at 130%
of its book value.
An analysis of the accounts receivable indicates that the
realizable value is $925,000. An independent appraisal made in

17. June 2020 values the land at $70,000. Using the lower-of-cost-
or-market rule, inventory is to be restated at $1,200,000.
Calway Corporation plans to exchange 18,000 of its shares for
the 120,000 Jack shares. During June 2020, the fair value of a
share of Calway Corporation is $270. Acquisition costs are
$12,000.
The stockholders’ equity account balances of Calway
Corporation as of June 30, 2015, are as follows:
Common stock ($10 par)
$2,000,000
Paid-in capital in excess of par
580,000
Retained earnings
2,496,400
Total stockholders’ equity
$5,076,400
Required
Record the acquisition of Jack Company by Calway on July 1,
2020. Use value analysis to support the acquisition entries.
Problem 1-5Name of Company Being AcquiredJack Company

18. Carol Fischer: Enter name of company being acquired.
Date of AcquisitionJune 30, 2020
Carol Fischer: Enter date of Acquisition.
Book
Carol Fischer: Enter Book Value of Assets Accounts Here.
Fair Value
Carol Fischer: Enter Market Values of Asset Accounts Here,
even if amount is same as Book Value.
Book
Carol Fischer: Insert Book Values of All Liability and Equity
Accounts in this column
Fair Value
Carol Fischer: Emter Market Values of all Liabilities In this
column. No Equity Balances should be added.
Current Assets and InvestmentsCurrent LiabilitiesInvestments
Carol Fischer: Enter Current Asset Account in A6 through A10.
Current Liabilities
Carol Fischer: Insert Current Liability Accounts in D6 through
D10.
Accounts Receivable (net)InventoryPrepaid InsuranceTotal
Current Assets and Investments--Total Current Liabilities--
Other Liabilities
Carol Fischer: Insuret Noncurrent Liability Accounts in Cells
D13 through D16.
Fixed Assets
Carol Fischer: Enter titles of Fixed Asset Account in Cell A14
through A17. Enter net of Accumulated Depreciation.

19. LandMachinery and EquipmentTotal Other Liabilities--Total
Fixed Assets--Total Liabilities--Intangibles
Carol Fischer: Enter Intangibles in A20 through A25
Carol Fischer: Enter Book Value of Assets Accounts Here.
Carol Fischer: Enter Market Values of Asset Accounts Here,
even if amount is same as Book Value.
Carol Fischer: Enter Current Asset Account in A6 through A10.
Carol Fischer: Insert Book Values of All Liability and Equity
Accounts in this column
Carol Fischer: Emter Market Values of all Liabilities In this
column. No Equity Balances should be added.
Carol Fischer: Insert Current Liability Accounts in D6 through
D10.
Carol Fischer: Enter titles of Fixed Asset Account in Cell A14
through A17. Enter net of Accumulated Depreciation.
Carol Fischer: Insuret Noncurrent Liability Accounts in Cells
D13 through D16.
Stockholders' EquityGoodwillCommon StockPaid in Capital in
Excess of ParRetained EarningsTotal Equity-Total Intangibles--

20. Total Assets--Total Liabilities and Equity-Net Assets-Purchase
PriceCashNumber of Shares exchangedPar Value of a share of
stockMarket Value of a share of stockMarket Value of stock
exchanged-Total Purchase Price-Value AnalysisTotal Price
Paid-Total Fair Value of Net Assets-Goodwill-Gain on Purchase
of Business-EntryAccount NameDebit (Credit)Investments-
Accounts Receivable (net)-Inventory-Prepaid Insurance---Land-
Machinery and Equipment-----Goodwill-----------Current
Liabilities-----------------Cash-Common Stock-Paid-in-Capital in
Excess of Par-Goodwill-Gain on Purchase of Business-CHECK-
Problem 1-6Name of Company Being AcquiredSylvester
Company
Carol Fischer: Enter name of company being acquired.
Date of AcquisitionDecember 31, 2015
Carol Fischer: Enter date of Acquisition.
Book
Carol Fischer: Enter Book Value of Assets Accounts Here.
Fair Value
Carol Fischer: Enter Market Values of Asset Accounts Here,
even if amount is same as Book Value.
Book
Carol Fischer: Insert Book Values of All Liability and Equity
Accounts in this column
Fair Value
Carol Fischer: Emter Market Values of all Liabilities In this
column. No Equity Balances should be added.
Current Assets and InvestmentsCurrent LiabilitiesNotes
Receivable
Carol Fischer: Enter Current Asset Account in A6 through A10.

21. Accounts Payable
Carol Fischer: Insert Current Liability Accounts in D6 through
D10.
Accounts ReceivablePayroll LiabilitiesInventoryCurrent Portion
of LT DebtOther Current AssetsInvestmentsTotal Current
Assets and Investments--Total Current Liabilities--Other
Liabilities
Carol Fischer: Insuret Noncurrent Liability Accounts in Cells
D13 through D16.
Fixed Assets
Carol Fischer: Enter titles of Fixed Asset Account in Cell A14
through A17. Enter net of Accumulated Depreciation.
Long Term DebtLand LT Payroll
LiabilitiesBuildingEquipmentTotal Other Liabilities--Total
Fixed Assets--Total Liabilities--Intangibles
Carol Fischer: Enter Intangibles in A20 through A25
Carol Fischer: Enter Book Value of Assets Accounts Here.
Carol Fischer: Enter Market Values of Asset Accounts Here,
even if amount is same as Book Value.
Carol Fischer: Enter Current Asset Account in A6 through A10.
Carol Fischer: Insert Book Values of All Liability and Equity
Accounts in this column

22. Carol Fischer: Emter Market Values of all Liabilities In this
column. No Equity Balances should be added.
Carol Fischer: Insert Current Liability Accounts in D6 through
D10.
Carol Fischer: Enter titles of Fixed Asset Account in Cell A14
through A17. Enter net of Accumulated Depreciation.
Carol Fischer: Insuret Noncurrent Liability Accounts in Cells
D13 through D16.
Stockholders' EquityGoodwillCommon StockPatentsPaid in
Capital in Excess of ParTrade NamesRetained EarningsTotal
Equity-Total Intangibles--Total Assets--Total Liabilities and
Equity-Net Assets-Purchase PriceCashNumber of Shares
exchangedPar Value of a share of stockMarket Value of a share
of stockMarket Value of stock exchanged-Total Purchase Price-
Value AnalysisTotal Price Paid-Total Fair Value of Net Assets-
Goodwill-Gain on Purchase of Business-EntryAccount
NameDebit (Credit)Notes Receivable-Accounts Receivable-
Inventory-Other Current Assets-Investments-Land -Building-
Equipment---Goodwill-Patents-Trade Names-------Accounts
Payable-Payroll Liabilities-Current Portion of LT Debt-----Long
Term Debt-LT Payroll Liabilities-----Cash-Common Stock-Paid-
in-Capital in Excess of Par-Goodwill-Gain on Purchase of
Business-CHECK-