Acquisition Entry, Deferred Taxes Patel Company issued 100,000 shares of $1 par value common stock (market value of $6/share) for the net assets of Seely Company on January 1, 2004, in a statutory merger.
Seely Company had the following assets, liabilities, and owners’ equity at that time: LO4 Book Value Tax Basis Fair Value Excess Cash $20,000 $20,000 $—O—
Accounts Receivable 112,000 112,000 tN)
Inventory (LIFO) 82,000 134,000 52,000 Land 30,000 55,000 25,000 Plant Assets (net) 392,000 463,000 71,000 Total Assets $636,000 $784,000 Allowance for Uncollectible Accounts $ 10,000 $ 10,000 $—O—
Accounts Payable 54,000 54,000 —0—
Bonds Payable 200,000 180,000 20,000 Common Stock, $1 par value 80,000 Other Contributed Capital 132,000 Retained Earnings 160,000 Total Equities $636,000 Required:
Prepare the journal entry to record the assets acquired and liabilities assumed. Assume an income tax rate of 40%.