accounting 267303

On January 1, Pan Corporation pays $400,000 cash and also issues 36,000 shares of $10 par common stock with a

market value of $660,000 for all the outstanding common shares of Sis Corporation. In addition, Pan pays $60,000

for registering and issuing the 36,000 shares and $140,000 for the other direct costs of the business combination,

in which Sis Corporation is dissolved. Summary balance sheet information for the companies immediately before the

merger is as follows (in thousands):

Cash $700 $ 80 $ 80

Inventories 240 160 200

Other current assets 60 40 40

Plant assets—net 520 360 560

Total assets $1,520 $640 $880

Current liabilities $320 $ 60 $ 60

Other liabilities 160 100 80

Common stock, $10 par 840 400

Retained earnings 200 80

Total liabilities and

owners’ equity

$1,520 $640

REQUIRED:Prepare all journal entries on Pan’s books to account for the acquisition.

P R