Maplewood Corporation Purchased the Net Assets of West Corporation on January

Essay

Maplewood Corporation purchased the net assets of West Corporation on January 2, 2013 for $560,000 and also paid $20,000 in direct acquisition costs.West's balance sheet on January
1, 2013 was as follows: $\begin{array}{lrlr}\text { Accounts receivable-net } & \$ 180,000 & \text { Current liabilities } & \$ 70,000 \\\text { Inventory } & 360,000 & \text { Long term debt } & 160,000 \\\text { Land } & 40,000 & \text { Common stock }(\$ 1 \text { par) } & 20,000 \\\text { Building-net } & 60,000 & \text { Paid-in capital } & 430,000 \\\text { Equipment-net } & 80,000 & \text { Retained earnings } & 40,000 \\\hline\text { Total assets } & \$ 720,000 & \text { Total liab. \& equity } & \$ 720,000\end{array}$
Fair values agree with book values except for inventory, land, and equipment, which have fair values of $400,000, $50,000 and $70,000, respectively.West has patent rights valued at $20,000.
Required:
A.Prepare Maplewood's general journal entry for the cash purchase of West's net assets.
B.Assume Maplewood Corporation purchased the net assets of West Corporation for $500,000 rather than $560,000, prepare the general journal entry.