he financial statements for Metzger Inc. and Ortiz Corp. just prior to their combination, for the year ending December 31, 20X2, follow. Ortiz's buildings were undervalued on its financial records by $80,000. Metzger Inc. Ortiz Corp. Revenues $1,800,000 $700,000 Expenses (1,580,000) (590,000) Net income $220,000 $110,000 Retained earnings, January 1, 2012 800,000 600,000 Net income (above) 220,000 110,000 Dividends paid (130,000) (80,000) Retained earnings, December 31, 2012 $890,000 $630,000 Cash $240,000 $160,000 Receivables and inventory 270,000 260,000 Buildings (net) 850,000 500,000 Equipment (net) 800,000 490,000 Total assets $2,160,000 $1,410,000 Liabilities $310,000 $155,000 Common stock 850,000 530,000 Additional paid-in capital 110,000 95,000 Retained earnings, December 31, 20X2 (above) 890,000 630,000 Total liabilities and stockholders' equity $2,160,000 $1,410,000 On December 31, 20X2, Metzger issued 58,000 new shares of its $10 par value stock in exchange for all the outstanding shares of Ortiz. Metzger's shares had a fair value on that date of $40 per share. Metzger paid $38,000 to an investment bank for assisting in the arrangements. Metzger also paid $28,000 in stock issuance costs to effect the acquisition of Ortiz. Ortiz will retain its incorporation. -1) Prepare the journal entry to record the issuance of common stock by Metzger. -2) Prepare the journal entry to record the payment of combination costs. -3) Determine consolidated net income for the year ended December 31, 20X2. -4) Determine consolidated additional paid-in capital at December 31, 20X2.
