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26 February, 20:28

Arturo Company pays $4,000,000 cash and issues 20,000 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 $25,000 and Arturo pays $42,000 for legal fees to complete the transaction. Prepare Arturo's journal entries to record its acquisition of Westmont.

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  1. 27 February, 00:09
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    As follows:

    Explanation:

    For acquisition of Westmont Company.

    Inventory dr. 600,000

    Land dr. 990,000

    Buildings dr. 2,000,000

    Customer Relationships dr. 800,000

    Goodwill dr. 690,000

    Accounts Payable cr. 80,000

    Common Stock cr. 40,000

    Additional paid-up capital cr. 960,000

    Cash cr. 4,000,000

    For legal fees

    Services Expense dr 42,000

    Cash cr 42,000

    For stock issuance

    Additional Paid-In Capital dr 25,000

    Cash cr 25,000
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