Question

Exercise 3-9 Peep Inc. acquired 100% of the outstanding common stock of Shy Inc. for $2,433,400 cash and 15,040 shares of its common stock (S2 par value). The stock's market value was $39 on the acquisition date. In addition, Peep Inc. incurred the following direct costs: Accounting fees for the purchase Legal fees for registering the common stock Other legal fees for the acquisition Travel expenses to meet with Shy managers SEC filing fees $15,230 28,310 48,640 4,880 2,000 $99,060 Before the acquisition consummation date, $91,980 of the direct costs was charged to a deferred charges account pending the completion of the acquisition. The remaining $7,080 has not been accrued or paid. Prepare the journal entry to record both the acquisition and the direct costs. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (To record the acquisition) (To record the direct costs)

Answer 1

Account Titles & Explanations	Debit	Credit
Investment in Shy Inc. ($2433400 + [15040 * $39])	$3019960
Cash		$2433400
Common Stock ($15040 * $2)		$30080
Other Contributed Capital		$556480
(To record the acquisition)
Acquisition Expense	$99060
Deferred Acquisition Charges		$91980
Acquisition Costs Payable		$7080
(To record the direct costs)