1) On January 2, 2011 Parsley Corporation issued 100,000 new shares of its $5 par value common stock valued at $19 a share for all of Sage Corporation's outstanding common shares. Parsley paid $15,000 to register and issue shares. Parsley also paid $20,000 for the direct combination costs of the accountants. The fair value and book value of Sage's identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2011 is as follows:

Parsley Sage

Cash $150,000 $120,000

Inventories 320,000 400,000

Other current assets 500,000 500,000

Land 350,000 250,000

Plant assets-net 4,000,000 1,500,000

Total Assets $5,320,000 $2,770,000

Accounts payable $1,000,000 $300,000

Notes payable 1,300,000 660,000

Capital stock, $5 par 2,000,000 500,000

Additional paid-in capital 1,000,000 100,000

Retained Earnings 20,000 1,210,000

Total Liabilities & Equities $5,320,000 $2,770,000

Required:

1. Prepare Parsley's general journal entry for the acquisition of Sage, assuming that Sage survives as a separate legal entity.

2. Prepare Parsley's general journal entry for the acquisition of Sage, assuming that Sage will dissolve as a separate legal entity.