Arturo company pays $4,130,000 cash and issues 28,200 shares of its $2 par value common stock (fair value of $50 per share) for all of westmont's common stock in a merger, after which westmont will cease to exist as a separate entity. stock issue costs amount to $32,400 and arturo pays $49,800 for legal fees to complete the transaction.

Question

Business

Keith Mahoney

22 January, 00:51

Arturo company pays $4,130,000 cash and issues 28,200 shares of its $2 par value common stock (fair value of $50 per share) for all of westmont's common stock in a merger, after which westmont will cease to exist as a separate entity. stock issue costs amount to $32,400 and arturo pays $49,800 for legal fees to complete the transaction.

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Jewel Salinas · Answer 1

investment on Westment 4,212,200 debit

Cash 4,212,200 credit

Explanation:

For the investment, we should include all the cost necessary to acquire the shares:

Total cost:

stocks issued cost 32,400

legal fees 49,800

cash to acquire the shares 4,130,000

TOTAL 4,212,200

We will create the investment account for this total and credit the cash