Sonic Enterprises Inc Has Decided to Purchase 100% of the Voting

Essay

Sonic Enterprises Inc has decided to purchase 100% of the voting shares of Jackson Inc. for $300,000 in cash on May 1, 2019. On the date, the balance sheets of each of these companies were as follows:
$\begin{array}{|l|r|r|}\hline & \text { Sonic Inc } & \text { Jackson Inc } \\\hline \begin{array}{l}\text { Cash and Short-Term } \\\text { Securities }\end{array} & \$ 750,000 & \$ 30,000 \\\hline \text { Inventory } & \$ 60,000 & \$ 20,000 \\\hline \text { Plant and Equipment (net) } & \$ 280,000 & \$ 140,000 \\\hline \text { Total Assets } & \$ 1,090,000 & \$ 190,000 \\\hline \text { Current Liabilities } & \$ 150,000 & \$ 25,000 \\\hline \text { Bonds Payable } & \$ 120,000 & \$ 30,000 \\\hline \text { Common Shares } & \$ 120,000 & \$ 70,000 \\\hline \text { Retained Earnings } & \$ 700,000 & \$ 65,000 \\\hline \text { Total Liabilities and Equity } & \$ 1,090,000 & \$ 190,000\\\hline\end{array}$ On that date, the fair values of Jackson's assets and liabilities were as follows:
$\begin{array}{|l|r|}\hline \text { Cash and Short-Term Securities } & \$ 40,000 \\\hline \text { Inventory } & \$ 15,000 \\\hline \text { Plant and Equipment (net) } & \$ 250,000 \\\hline \text { Current Liabilities } & \$ 25,000 \\\hline \text { Bonds Payable } & \$ 25,000\\\hline\end{array}$ Sonic's Book Values approximated their Fair Values on that date.
Required:
a) Calculate the amount of Goodwill arising from this combination.
b) Prepare the journal entry to record Sonic's acquisition of Jackson's Shares.
c) Prepare Sonic's Consolidated Balance Sheet immediately following its acquisition of Jackson's assets.