Affiliate Marketing Secrets

JKRB, Don G and Sandy…first of all, thanks to all of you for your guidance through so many accounting problems on this forum. I have often been able to work through problems by reading your explanations and analysis’. You are helping so many more than the one who is asking the question! And speaking of questions…I have a whopper! The examples given in our text are so different from this problem. Desperately hoping one of you can help guide me through this one. (BTW..the first number will be the book value and the second will be the fair value..yahoo moves my numbers over like that.)
Axel Corporation acquires 100% of the stock of Wheal Company on December 31, Year 4. The following information pertains to Wheal Company on the date of acquisition:
Book Value Fair Value
Cash $40,000 $40,000
Accounts receivable 60,000 55,000
Inventory 50,000 75,000
Property, plant and equip (net) 100,000 200,000
Secret formula (patent) ___ 30,000
Total Assets $250,000 $400,000
Accounts payable $30,000 $30,000
Accrued employee pensions 20,000 22,000
Long-term debt 40,000 38,000
Capital stock 100,000 ___
Other contributed capital 25,000 ___
Retained earnings 35,000 ___
Total liabilities and equity $250,000 $90,000
Axel Corporation issues $110,000 par value ($350,000 market value on December 31, Year 4) of its own stock to the shareholders of Wheal Company to consummate the transaction, and Wheal Company becomes a wholly owned, consolidated subsidiary of Axel Corporation.
Required:
a. Prepare journal entries for Axel Corp. to record the acquisition of Wheal Company stock assuming (1) pooling accounting and (2) purchase accounting.
b. Prepare the worksheet entries for Axel Corp. to eliminate the investment in Wheal Company stock in preparation for a consolidated balance sheet at December 31, Year 4 assuming (1) pooling accounting and (2) purchase accounting.
c. Calculate consolidated retained earnings at December 31, Year 4 (Axel’s retained earnings at this date are $150,000), assuming:
(1) Axel Corp. uses the pooling method for this business combination.
(2) Axel Corp. uses the purchase method for acquisition of Wheal Company.
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(b) Cr. Investment in Wheal for $110,000 in (1), and $350,000 total in (2)

Which of the following information would be on a balance sheet?
6.025% Long-Term Note Payable (only long term portion) 230,000
Accounts Payable 220,000
Accounts Receivable 110,000
Accumulated Depreciation – Building & Equip 109,600
Allowance of Doubtful Accounts 5,800
Building and Equipment 400,000
Capital Stock 2$ par, Authorized 100,00 Shares 60,000
Cash on Hand 44,725
Cash Surrendered Value of Life Insurance Policies 10,800
Current Installment of Long-term Debt (6.025% note) 20,000
Depreciation Expense 19,900
Discontinued Operational Loss 42,000
Dividends Received as Revenue 4,500
Error in Inventory Pricing in 2005 12,500
Goodwill 55,000
Inventories, at FIFO Cost (with market value of 360,000) 332,600
Long-Term Advance to Affiliated Company (Note Receivable) 50,000
Paid-in Capital in Excess Par 155,200
Prepaid 6 Months of Rent 3,600
Real Estate Tax Payable due 3/31/2010 6,625
Retain Earnings – Ending 12/31/09 262,800
Sales 450,000
Sales Return and Allowances 3,100
Savings Account Balance as of 12/31/09 26,000
Trading Marketable Securities (Listed at Cost, with a Market value of 51,800) 58,500
Uncollectible Account Expense 12,000
Unearned Revenue – Current Portion 14,500
~Notes are not required as of 12/31/09