Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,000 shares of Pamrod’s

$20 par value common stock. Balance sheet data for both companies just before the merger are given as follows:

Pamrod shares were selling for $150 on the date of acquisition.

Required

Prepare the following:

a. Journal entries to record the acquisition on Pamrod’s books.

b. A balance sheet for the combined enterprise immediately following the business combination.

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Balance Sheet Items Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Total Assets Accounts Payable Bonds Payable Common Stock. $20 par value $5 par value Additional Paid-In Capital Retained Earnings Total Liabilities & Equities Pamrod Manufacturing Book Value $ 70,000 100,000 200,000 50,000 600,000 (250,000) $770.000 $50,000 300,000 200,000 40,000 180,000 $770,000 Fair Value $ 70,000 100,000 375,000 80,000 540,000 $1,165.000 $ 50,000 310,000 Stafford Industries Book Value $ 30,000 60,000 100,000 40,000 400,000 (150,000) $480,000 $ 10,000 150,000 100,000 20,000 200,000 $480,000 Fair Value $30,000 60,000 160,000 30,000 350,000 $630,000 $ 10,000 145,000