Pat Corporation paid $5,000,000 for Saw Corporation's voting common stock on January 2, 2011, and Saw was dissolved. The purchase price consisted of 100,000 shares of Pat's common stock with a market value of $4,000,000, plus $1,000,000 cash. In addition, Pat paid $100,000 for registering and issuing the 100,000 shares of common stock and $200,000 for other costs of combination. Balance sheet information for the companies immediately before the acquisition is summarized as follows (in thousands):

REQUIRED1. Prepare journal entries for Pat Corporation to record its acquisition of Saw Corporation, including all allocations to individual asset and liability accounts.2. Prepare a balance sheet for Pat Corporation on January 2, 2011, immediately after the acquisition and dissolution ofSaw.

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Pat Saw Book Value Book Value Fair Value $ 480 $ 480 Cash Accounts receivable-net $6,000 2,600 3,000 5,000 720 720 Notes receivablenet Inventories 600 600 840 360 200 1,200 1,600 1,000 400 400 Other current assets Land 1,400 4,000 Buildings-net Equipment-net 18,000 2,400 1,200 20,000 $60.000 Total assets $6,000 $7,200 $ 2,000 10,000 $ 600 1,400 $ 600 1,200 Accounts payable Mortgage payable-10% Capital stock, $10 par Other paid-in capital Retained earnings Total equities 20,000 16.000 2,000 1,200 12,000 800 $60,000 $6.000