Answer and Explanation:
The journal entries are shown below:
1. On July 1 2019
Machinery Dr $67,000
Fixture & Fittings Dr $68,000
Vehicles Dr $35,000
Current assets Dr $12,000
Goodwill Dr $28,000
To Current liabilities $18,000
To Share Capital (80,000 × $1 ) $80,000
To Paid in capital in excess of par 112,000 {80,000 × ($2.40 - $1)}
(Being the acquisition is recorded)
For recording this we debited all assets as it increased the values of assets and credited the liabilities and stockholder equity as it also increased
2. On July 1 2019
Paid in capital in excess of par $1,600
To Cash $1,600
(Being the share issuance cost is recorded)
For recording this we debited the paid in capital as it reduced the stockholder equity and credited the cash as it reduced the assets
Working notes:
For goodwill amount
= Purchase consideration - net identifiable assets
= $192,000 - $164,000
= $28,000
The net identifiable asset come from
= $67,000 + $68,000 + $35,000 + $12,000 - $18,000
= $164,000
