please see Excel file
Instructions This spreadsheet contains 16 individual worksheets that are to be completed as part of Homework #2. Please be sure to complete all 16 of them in order to earn full credit for the Excel portion of the homework. On each of the six worksheets, enter the correct numbers in gray-shaded cells. When your answer is correct, that cell will change color to a light green. Do not copy formulas into cells - doing so will overwrite the conditional formatting that's used to make the cells change color when correct. For guidance and instructions on how to work through these exercises, please be sure to go through the "Walk-Through Lecture" and "Practice Exercises" found in the Content section of Weeks #1 and #2. If you have questions, please post them up into the "Content & Homework Questions" forum for this week. Exercises "1A 1B 1C", "2A 2B 2C", and "3A 3B 3C" represent three sets of a one company performing an acquisition of another. For each set, the "A" exercises are the journal entries made under an Asset Purchase, "B" exercises are the journal entries made under a Stock Purchase / Acquisition Method, and the "C" exercises represent the required entries for an Initial Consolidation if a Stock Purchase / Acquisition Method is done. Exercises 4A, 4B, & 4C represent the journal entries that need to be made by the acquiring company and the selling company if the acquisition was made doing an Asset Purchase or a Stock Purchase using the issuance of stock on the part of the purchasing company to pay for the acquisition. Exercises 5A, 5B, & 5C represents the journal entries that need to be made by the acquiring company to record income and dividend activities on the part of the acquired company. Exercise 6 is a series of word-type problems similar to how questions relating to the material would be presented in multiple choice questions on our exams and the CPA exam. 1A Asset Purchase Exercise 1A: Asset Purchase of Another Company CheapBeer Inc. wants to purchase the net assets of FancyBrew Inc. for purposes of horizontal consolidation and will pay $750,000 cash for them. The balance sheet for FancyBrew Inc. on the date of purchase is as follows: FancyBrew Inc. Balance Sheet as of 7/1/20X1 AssetsLiabilities & Owners' Equity Book ValueFair Market ValueBook ValueFair Market Value Cash$0$0A/P$75,000$75,000 A/R60,00050,000Notes Payable25,00025,000 Inventory75,00080,000Mortgage Payable50,00050,000 Net Fixed Assets150,000200,000Total Liabilities:$150,000 Patents025,000 Common Stock50,000 Retained Earnings85,000 Total Equity:$135,000 Total Assets:$285,000Total Liabilities & O.E.:$285,000 A) Prepare the journal entry amounts for this asset acquisition on the books of CheapBeer Inc. by entering the proper debit and credit amounts in the gray-shaded cells below. AccountDebitsCredits A/R Inventory Net Fixed Assets Patents Goodwill Cash A/P Notes Payable Mortgage Payable Total$0$0 B) Prepare the journal entry amounts for this asset acquisition on the books of FancyBrew Inc. by entering the proper debit and credit amounts in the gray-shaded cells below. AccountDebitsCredits Cash A/P Notes Payable Mortgage Payable A/R Inventory Net Fixed Assets Gain on Sale of Net Assets Total$0$0 1B Stock Purchase Exercise 1B: Stock Purchase of Another Company CheapBeer Inc. wants to purchase the net assets of FancyBrew Inc. for purposes of horizontal consolidation and will pay $750,000 cash for them. The balance sheet for FancyBrew Inc. on the date of purchase is as follows: FancyBrew Inc. Balance Sheet as of 7/1/20X1 AssetsLiabilities & Owners' Equity Book ValueFair Market ValueBook ValueFair Market Value Cash$0$0A/P$75,000$75,000 A/R60,00050,000Notes Payable25,00025,000 Inventory75,00080,000Mortgage Payable50,00050,000 Net Fixed Assets150,000200,000Total Liabilities:$150,000 Patents025,000 Common Stock50,000 Retained Earnings85,000 Total Equity:$135,000 Total Assets:$285,000Total Liabilities & O.E.:$285,000 A) Prepare the journal entry amounts for this stock purchase on the books of CheapBeer Inc. by entering the proper debit and credit amounts in the gray-shaded cells below. AccountDebitsCredits Investment in FancyBrew Inc. Cash Total$0$0 B) Note: There is NO journal entry made on the part of the acquired company as stock is purchased from the shareholders, and NOT the acquired company! 1C Initial Consolidation Exercise 1C: Initial Consolidation as of Date of Acquisition CheapBeer Inc. purchased 100% of the outstanding stock of FancyBrew Inc. for purposes of horizontal consolidation and paid $750,000 cash for the stock. The balance sheets for the two companies immediately after the acquisition are as follows: FancyBrew Inc.CheapBeer Inc. Balance Sheet as of 7/1/20X1Balance Sheet as of 7/1/20X1 AssetsLiabilities & Owners' EquityAssetsLiabilities & Owners' Equity Book ValueFair Market ValueBook ValueFair Market ValueBook ValueBook Value Cash$0$0A/P$75,000$75,000Cash$250,000A/P$175,000 A/R60,00050,000Notes Payable25,00025,000A/R175,000Notes Payable150,000 Inventory75,00080,000Mortgage Payable50,00050,000Inventory350,000Mortgage Payable300,000 Net Fixed Assets150,000200,000Total Liabilities:$150,000Net Fixed Assets200,000Total Liabilities:$625,000 Patents025,000Investment in Subsidiary750,000 Common Stock50,000Common Stock250,000 Retained Earnings85,000Retained Earnings850,000 Total Equity:$135,000Total Equity:$1,100,000 Total Assets:$285,000Total Liabilities & O.E.:$285,000Total Assets:$1,725,000Total Liabilities & O.E.:$1,725,000 A) Complete the below Consolidation Entries for the "Consolidation & Elimination Worksheet" for this acquisition as of the date of the acquisition by entering the proper debit and credit amounts in the gray-shaded cells below. Trial BalancesCombinedConsolidation EntriesConsolidated Balance AccountCheapBeerFancyBrewEntryDebitEntryCredit Cash$250,000$0$250,000Entry "A" Eliminate the subsidiary's equity against the parent's investment account A/R175,00060,000235,000"B" Inventory350,00075,000425,000"B" Net Fixed Assets200,000150,000350,000"B" Patents000"B"Entry "B" Adjust the net assets of the subsidiary to Fair Market Value and offset to the investment Investment in Subsidiary750,0000750,000"A" "B" "C" Goodwill000"C" A/P(175,000)(75,000)(250,000)Entry "C" Any remaining amount in the investment account gets eliminated to Goodwill Notes Payable(150,000)(25,000)(175,000) Mortgage Payable(300,000)(50,000)(350,000) Common Stock - CheapBeer(250,000)(250,000) Common Stock - FancyBrew(50,000)(50,000)"A" Retained Earnings - CheapBeer(850,000)(850,000) Retained Earnings - FancyBrew(85,000)(85,000)"A" Totals$0$0$0$0$0$0 2A Asset Purchase Exercise 2A: Asset Purchase of Another Company HotSauce Inc. wants to purchase the net assets of AuntyAcid Inc. for purposes of horizontal consolidation and will pay $850,000 cash for them. The balance sheet for AuntyAcid Inc. on the date of purchase is as follows: AuntyAcid Inc. Balance Sheet as of 3/31/20X1 AssetsLiabilities & Owners' Equity Book ValueFair Market ValueBook ValueFair Market Value Cash$0$0A/P$75,000$75,000 A/R100,00095,000Notes Payable125,000125,000 Inventory250,000275,000Mortgage Payable150,000120,000 Net Fixed Assets250,000350,000Total Liabilities:$350,000 Patents0100,000 Common Stock200,000 Retained Earnings50,000 Total Equity:$250,000 Total Assets:$600,000Total Liabilities & O.E.:$600,000 A) Prepare the journal entry amounts for this asset acquisition on the books of HotSauce Inc. by entering the proper debit and credit amounts in the gray-shaded cells below. AccountDebitsCredits A/R Inventory Net Fixed Assets Patents Goodwill Cash A/P Notes Payable Mortgage Payable Total$0$0 B) Prepare the journal entry amounts for this asset acquisition on the books of AuntyAcid Inc. by entering the proper debit and credit amounts in the gray-shaded cells below. AccountDebitsCredits Cash A/P Notes Payable Mortgage Payable A/R Inventory Net Fixed Assets Gain on Sale of Net Assets Total$0$0 2B Stock Purchase Exercise 2B: Stock Purchase of Another Company HotSauce Inc. wants to purchase the net assets of AuntyAcid Inc. for purposes of horizontal consolidation and will pay $850,000 cash for them. The balance sheet for AuntyAcid Inc. on the date of purchase is as follows: AuntyAcid Inc. Balance Sheet as of 3/31/20X1 AssetsLiabilities & Owners' Equity Book ValueFair Market ValueBook ValueFair Market Value Cash$0$0A/P$75,000$75,000 A/R100,00095,000Notes Payable125,000125,000 Inventory250,000275,000Mortgage Payable150,000120,000 Net Fixed Assets250,000350,000Total Liabilities:$350,000 Patents0100,000 Common Stock200,000 Retained Earnings50,000 Total Equity:$250,000 Total Assets:$600,000Total Liabilities & O.E.:$600,000 A) Prepare the journal entry amounts for this stock purchase on the books of HotSauce Inc. by entering the proper debit and credit amounts in the gray-shaded cells below. AccountDebitsCredits Investment in AuntyAcid Inc. Cash Total$0$0 B) Note: There is NO journal entry made on the part of the acquired company as stock is purchased from the shareholders, and NOT the acquired company! 2C Initial Consolidation Exercise 2C: Initial Consolidation as of Date of Acquisition HotSauce Inc. purchased AuntyAcid Inc. for purposes of horizontal consolidation and paid $850,000 cash for 100% of their outstanding stock. The balance sheets for the two companies immediately after the acquisition are as follows: AuntyAcid Inc.HotSauce Inc. Balance Sheet as of 3/31/20X1Balance Sheet as of 3/31/20X1 AssetsLiabilities & Owners' EquityAssetsLiabilities & Owners' Equity Book ValueFair Market ValueBook ValueFair Market ValueBook ValueBook Value Cash$0$0A/P$75,000$75,000Cash$500,000A/P$100,000 A/R100,00095,000Notes Payable125,000125,000A/R150,000Notes Payable50,000 Inventory250,000275,000Mortgage Payable150,000120,000Inventory400,000Mortgage Payable500,000 Net Fixed Assets250,000350,000Total Liabilities:$350,000Net Fixed Assets300,000Total Liabilities:$650,000 Patents0100,000Investment in Subsidiary850,000 Common Stock200,000Common Stock750,000 Retained Earnings50,000Retained Earnings800,000 Total Equity:$250,000Total Equity:$1,550,000 Total Assets:$600,000Total Liabilities & O.E.:$600,000Total Assets:$2,200,000Total Liabilities & O.E.:$2,200,000 A) Complete the below Consolidation Entries for the "Consolidation & Elimination Worksheet" for this acquisition as of the date of the acquisition by entering the proper debit and credit amounts in the gray-shaded cells below. Trial BalancesCombinedConsolidation EntriesConsolidated Balance AccountHotSauceAuntyAcidEntryDebitEntryCreditEntry "A" Eliminate the subsidiary's equity against the parent's investment account Cash$500,000$0$500,000 A/R150,000100,000250,000"B" Inventory400,000250,000650,000"B" Net Fixed Assets300,000250,000550,000"B"Entry "B" Adjust the net assets of the subsidiary to Fair Market Value and offset to the investment Patents000"B" Investment in Subsidiary850,0000850,000"A" "B" "C" Goodwill000"C"Entry "C" Any remaining amount in the investment account gets eliminated to Goodwill A/P(100,000)(75,000)(175,000) Notes Payable(50,000)(125,000)(175,000) Mortgage Payable(500,000)(150,000)(650,000)"B" Common Stock - HotSauce(750,000)(750,000) Common Stock - AuntyAcid(200,000)(200,000)"A" Retained Earnings - HotSauce(800,000)(800,000) Retained Earnings - AuntyAcid(50,000)(50,000)"A" Totals$0$0$0$0$0$0 3A Asset Purchase Exercise 3A: Asset Purchase of Another Company MarshaMarshaMarsha Inc. wants to purchase the net assets of OhMyNose Inc. for purposes of horizontal consolidation and will pay $2,000,000 cash for them. The balance sheet for OhMyNose Inc. on the date of purchase is as follows: OhMyNose Inc. Balance Sheet as of 9/15/20X1 AssetsLiabilities & Owners' Equity Book ValueFair Market ValueBook ValueFair Market Value Cash$0$0A/P$250,000$250,000 A/R250,000250,000Notes Payable50,00050,000 Inventory150,000150,000Bonds Payable500,000450,000 Net Fixed Assets500,0001,000,000Total Liabilities:$800,000 Trademarks100,000500,000 Common Stock25,000 Retained Earnings175,000 Total Equity:$200,000 Total Assets:$1,000,000Total Liabilities & O.E.:$1,000,000 A) Prepare the journal entry amounts for this asset acquisition on the books of MarshaMarshaMarsha Inc. by entering the proper debit and credit amounts in the gray-shaded cells below. AccountDebitsCredits A/R Inventory Net Fixed Assets Trademarks Goodwill Cash A/P