The writer is very fast, professional and responded to the review request fast also. Thank you.
Presentation/PPT
27/08/2022
By 2009, Mr. Cardell decided to acquire another office furniture company. On July 1, 2009, the Holton-Central bankruptcy judge accepted Belmont’s $4,765,000 offer for Holton-Central’s assets and accounts payable. The $4,765,000 purchase price equaled the market value of the tangible assets, minus $875,000 of accounts payable, plus $265,000, which Mr. Cardell considered goodwill:
Raw material inventory $175,000
Work-in-process inventory $220,000
Finished goods inventory $115,000
Equipment (5-year life) $450,000
Building (20-year life) $3,600,000
Land $815,000
Total tangible assets $5,375,000
Less: Accounts payable $875,000
Net tangible assets $4,500,000
Goodwill $265,000
Total purchase price $4,765,000
July 1, 2009, the acquisition was completed as follows:
1. Belmont Office Furniture formed Holton-Central Holdings and paid $3.9 million for all 3,900,000 shares of Holton-Central Holdings’ $.01 par value common stock.
2. Holton-Central Holdings borrowed $6,000,000 to help Holton-Central exit from bankruptcy; the principal would be repaid in six $1 million payments each July 1, beginning July 1,2010. Also, due each July 1, beginning July 1,2010, was 10% interest on the unpaid balance as of the previous July 1.
3. Holton-Central Holdings paid $4,765,000 cash for the assets of Holton-Central Inc., ans assumed the firm’s $875,000 of accounts payable.
July 2, 2009-December 31, 2009
Mr. Cardell’s first action was to close four furniture showrooms in Chicago, Los Angeles, New York and Atlanta, because the leases had been cancelled in bankruptcy. These closures would save $950,000 annually; Mr. Cardell believed sales would decline only marginally. He also negotiated a more favorable labor contract with former employees, which would save another $750,000 annually. On July 2, 2009, the firm reopened for business. The following is a summary of Holton-Central’s activity for the second half of 2009:
1. Paid the $875,000 of accounts payable.
2. Paid $154,500 for utilities, professional services and other administrative expenses.
3. Paid $1,408,000 for office wages and related payroll taxes and benefits.
4. Paid $2,785,000 for selling and marketing expenses.
5. Paid $900,000 for production machinery. The machinery was purchased October 1, 2009. The machinery had a useful life of five years with no salvage value.
6. Paid $228,000 for various one-year insurance policies.
7. Purchased $5,345,000 of raw material; $835,000 was unpaid as of December 31, 1998.
8. Manufacturing records showed $4,935,000 of raw material transferred to work in process.
9. Paid $7,878,000 in cash for production wages and charged the costs to work-in- process inventory.
10. Charged $6,662,000 to work-in-process inventory for manufacturing overhead items, including $6,400,000 paid in cash and $262,000 for depreciation on manufacturing facilities.
11. Manufacturing records showed $19,123,000 of work-in-process inventory transferred to finished goods inventory.
12. Sold chairs for $25,563,000. Of that, $4,587,000 had not been paid as of December 31, 2008.
13. Manufacturing records showed cost of goods sold of $18,593,000.
14. Recorded depreciation expense of $86,000.
15. Recorded accrued interest expense.
16. Recorded insurance expense of $95,000.
17. In late December, Mr. Cardell received a call from Holton-Central’s largest customer. To cut costs, previous management had substituted a low-grade fabric on 1,800 chairs that the customer purchased in 2008 and 2009. Repairing those chairs would cost $360,000. Mr. Cardell estimated that customers would request repairs to another several thousand chairs, which would cost another $560,000. Although that liability was discharged in bankruptcy, Mr. Cardell believed failure to repair the chairs would irreparably damage the firm’s reputation. He notified customers that Holton-Central would repair the chairs at no cost.
18. Computed income tax expenses of $365,000 for 2009, payable in 2010.
Required
Record journal entries for Holton-Central’s sale of stock, incurrence of debt, and the 18 activities listed above.
Prepare a balance sheet as of December 31, 2009, and an income statement and statement of cash flows for the period July 1, 2009, through December 31, 2009.
Evaluate Holton-Central’s performance during its first six months of operations.
The writer is very fast, professional and responded to the review request fast also. Thank you.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more