On December 31, 20xx, the Oliver Corporation acquired 100 percent ownership of the Stanley Corporation by issuing 500,000 shares of common stock.

The two companies were then legally merged. The market price of Oliver Corporation stock was $70 per share. At the time of acquisition, the balance sheets of the two corporations were as follows:

a. Prepare journal entries to record the acquisition, assuming the Stanley Corporation ceases to exist as a separate corporate entity.

b. Show the balance sheet of the Oliver Corporation after the merger.

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Assets Liabilities Common Stock Retained Earnings Oliver Corporation $200,000,000 $ 95,000,000 75,000,000 30,000,000 $200,000,000 Stanley Corporation $40,000,000 $ 5,000,000 10,000,000 25,000,000 $40,000,000