*P13-7B Patel Company purchased all the outstanding common stock of Singh Company on

Price: $3.99


*P13-7B Patel Company purchased all the outstanding common stock of Singh Company on
December 31, 2008. Just before the purchase, the condensed balance sheets of the two companies
were as follows.

Patel Company Singh Company
Current assets $1,478,000 $379,000
Plant and equipment (net) 1,882,000 351,000
$3,360,000 $730,000
Current liabilities $ 870,000 $ 90,000
Common stock 1,947,000 360,000
Retained earnings 543,000 280,000
$3,360,000 $730,000

Patel used current assets of $710,000 to acquire the stock of Singh.The excess of this purchase price
over the book value of Patel’s net assets is determined to be attributable $20,000 to Singh’s plant and
equipment and the remainder to goodwill.

Instructions

(a) Prepare the entry for Patel Company’s acquisition of Singh Company stock.

(b) Prepare a consolidated worksheet at December 31, 2008.

(c) Prepare a consolidated balance sheet at December 31, 2008