Journal entries and balance sheet for purchase business combination On January 2, 2006, Persis Corporation issues its own $10 par common stock for all the outstand¬ ing stock of Sineco Corporation in a purchase business combination. Sineco is dissolved. In addi¬ tion, Persis pays $20,000 for registering and issuing securities and $30,000 for other costs of com¬ bination. The market price of Persis’s stock on January 2, 2006, is $30 per share. Relevant balance sheet information for Persis and Sineco Corporations on December 31, 2005, just before the busi¬ ness combination, is as follows (in thousands):
Persis Historical Cost Sineco Historical Cost Sineco Fair Value Cash $ 120 $ 10 $ 10 Inventories 50 30 60 Other current assets 100 90 100 Land 80 20 100 Plant and equipment—net 650 200 350 Total assets S 1.000 S350 S620 Liabilities $ 200 $ 50 $ 50 Capital stock, $10 par 500 100 Additional paid-in capital 200 50 Retained earnings Total liabilities and 100 150 owners’ equity SI.000 S350 REQUIRED 1. Assume that Persis issues 25,000 shares of its stock for all of Sineco’s outstanding shares.

a. Prepare journal entries to record the business combination of Persis and Sineco.

b. Prepare a balance sheet for Persis Corporation immediately after the business combination. 2. Assume that Persis issues 15,000 shares of its stock for all of Sineco’s outstanding shares.

a. Prepare journal entries to record the business combination of Persis and Sineco.

b. Prepare a balance sheet for Persis Corporation immediately after the business combination.