Terry Duffy Corporation purchased all the outstanding common stock of Henning Plastics, Inc. on December 31, 2002. Just before the purchase, the condensed balance sheets of the two companies appeared as follows.
Terry Duffy Corporation Henning Plastics, Inc.
Current assets $1,480,000 $439,500
Plant & equipment 2,100,000 672,000
$3,580,000 $1,111,500
Current liabilities $ 578,000 $ 92,500
Common Stock 1,950,000 525,000
Retained earnings 1,052,000 494,000
$3,580,000 $1,111,500
Duffy used current assets of $1,200,000 to acquire the stock of Henning Plastics. The excess of this purchase price over the book value of Henning Plastics’ net assets is determined to be attributable $81,000 to Henning Plastics’ plant and equipment and the remainder to goodwill.
Instructions:
(1) Prepare the entry for Terry Duffy’s acquisition of Henning Plastics, Inc. stock.
(2) Prepare a consolidated work sheet at December 31, 2002.
(3) Prepare a consolidated balance sheet at December 31, 2002.