On April 25, 2010, Bullseye Company purchased all of the outstanding common stock of Vista Company, paying $14,000,000. The book values and fair values of Vista's assets and liabilities acquired are shown below in dollar amounts:
Accounts
Book Value
Fair Value
Accounts Receivables
$1,900,000
$1,725,000
Inventories
$2,800,000
$4,000,000
Accounts Payable
$2,000,000
$2,000,000
Property, Plant and Equipment
$8,000,000
$12,625,000
Bonds Payable
$4,600,000
$4,225,000
Using Excel, prepare the journal entry to record the acquisition by Bullseye Company.
To prepare the journal entry to record the acquisition by Bullseye Company, you need to account for the assets and liabilities acquired at their fair values. Here's how you can calculate and record the journal entry in Excel:
1. Create an Excel worksheet and label three columns: Account, Debit, and Credit.
2. In the Account column, list the accounts to be debited and credited.
3. In the Debit column, enter the debit amounts, and in the Credit column, enter the credit amounts.
4. Identify the accounts to be debited and credited based on the fair values of the assets and liabilities acquired:
- Accounts Receivables: Debit Accounts Receivable for the fair value of $1,725,000.
- Inventories: Debit Inventories for the fair value of $4,000,000.
- Property, Plant and Equipment: Debit Property, Plant and Equipment for the fair value of $12,625,000.
- Accounts Payable: Credit Accounts Payable for the fair value of $2,000,000.
- Bonds Payable: Credit Bonds Payable for the fair value of $4,225,000.
5. Calculate the difference between the fair values and book values for each account:
- Accounts Receivables: $1,900,000 - $1,725,000 = $175,000 (Gain/Income)
- Inventories: $4,000,000 - $2,800,000 = $1,200,000 (Gain/Income)
- Property, Plant and Equipment: $12,625,000 - $8,000,000 = $4,625,000 (Gain/Income)
6. Add the gains and incomes to the Debit column:
- Debit gain/Income for Accounts Receivables: $175,000
- Debit gain/Income for Inventories: $1,200,000
- Debit gain/Income for Property, Plant and Equipment: $4,625,000
7. Calculate and assign the balance for the Credit column:
- Credit Balance: $175,000 + $1,200,000 + $4,625,000 = $6,000,000
8. Enter the final journal entry in the Excel worksheet:
Account | Debit ( $ ) | Credit ( $ )
------------------------------------------------------------
Accounts Receivables | 1,725,000 | -
Inventories | 4,000,000 | -
Property, Plant and Equipment | 12,625,000 | -
Accounts Payable | - | 2,000,000
Bonds Payable | - | 4,225,000
Gain/Income Accounts | 175,000 | 6,000,000
Make sure to review and double-check the accuracy of your journal entry before recording it in your financial records.
To prepare the journal entry to record the acquisition by Bullseye Company, you will need to take into account the fair values of the assets and liabilities acquired from Vista Company. Here's how you can do it step-by-step in Excel:
Step 1: Open a new Excel spreadsheet and create the following columns: Account, Debit, Credit.
Step 2: In the "Account" column, list the accounts involved in the journal entry, which are: Accounts Receivables, Inventories, Property, Plant and Equipment, Accounts Payable, and Bonds Payable.
Step 3: In the "Debit" column, enter the debit amounts. The debit amounts will be the fair values of the assets acquired, which are $1,725,000 for Accounts Receivables, $4,000,000 for Inventories, and $12,625,000 for Property, Plant and Equipment.
Step 4: In the "Credit" column, enter the credit amounts. The credit amounts will be the fair values of the liabilities assumed, which are $2,000,000 for Accounts Payable and $4,225,000 for Bonds Payable.
Step 5: Below the last row, create a new row for the common stock issued by Bullseye Company. In the "Account" column, enter "Common Stock." In the "Debit" column, enter the amount paid for the outstanding common stock of Vista Company, which is $14,000,000. Leave the "Credit" column for the common stock entry blank.
Step 6: Calculate the total debit and credit amounts by summing the amounts in the respective columns.
Step 7: Below the total debit and credit rows, create a new row for the balancing entry. In the "Account" column, enter "Balancing Entry." In the "Credit" column, enter the difference between the total debit and credit amounts. In the "Debit" column, leave the balancing entry blank.
Step 8: Double-check your entries and ensure that the total debit amount is equal to the total credit amount.
This is how you can prepare the journal entry to record the acquisition by Bullseye Company using Excel. Remember to consult with a professional accountant for accurate and specific guidance based on your circumstances.