Accounting by an acquirer   LO6 David Ltd, a supplier of snooker equipment, agreed to acquire the business of a rival company, Tennant Ltd, taking over all assets and liabilities as at 1 June 2020. The price agreed on was $60 000, payable $20 000 in cash and the balance by the issue to the selling company of 16 000 fully paid shares in David Ltd, these shares having a fair value of $2.50 per share. The trial balances of the two companies as at 1 June 2020 were as follows. David Ltd Tennant Ltd Dr Cr Dr Cr Share capital $100 000 $ 90 000 Retained earnings 12 000 $ 24 000 Accounts payable 2 000 20 000 Cash $ 30 000 — Plant (net) 50 000 30 000 Inventories 14 000 26 000 Accounts receivable 8 000 20 000 Government bonds 12 000 — Goodwill — — 10 000 — $114 000 $114 000 $110 000 $110 000 All the identifiable net assets of Tennant Ltd were recorded by Tennant Ltd at fair value except for the inventories, which were considered to be worth $28 000 (assume no tax effect). The plant had an expected remaining life of 5 years. The business combination was completed and Tennant Ltd went into liquidation. David Ltd incurred incidental costs of $500 in relation to the acquisition. Costs of issuing shares in David Ltd were $400. Required 1. Prepare the journal entries in the records of David Ltd to record the business combination. 2. Show the statement of financial position of David Ltd after completion of the business combination.