32.On December 31, 2015, Alpha Corporation acquired Tower Corporation by paying $100,000 in cash, and issuing 40,000 shares of its $2 par value common stock, for 100% of Tower Corporation's common stock.Alpha Corporation's common stock had a fair value of $5 per share on December 31, 2015.Alpha Corporation also paid $20,000 cash to a public accounting firm for services in negotiating the combination and $4,000 cash to a stockbroker for services in issuing the shares of Alpha Corporation common stock.The following information was available before the combination.Both companies continued to exist after the combination.

Book Value and Fair Value at December 31, 2015

Account

Alpha

Book Value

Tower

Book Value

Tower

Market Value

Cash

$125,000

$29,000

$29,000

Accounts Receivable

242,000

40,000

40,000

Equipment (10 year life)

302,000

120,000

170,000

Bonds Payable (5 years)

187,000

32,000

32,000

Common Stock

240,000

37,000

Additional Paid-in Capital

120,000

85,000

Retained Earnings

122,000

35,000

Alpha uses the sophisticated equity method to account for its investment in Tower.

• Prepare the journal entries that Alpha would make to record its investment in Tower (include all entries related to this acquisition).
• Prepare the worksheet journal entries necessary for Alpha to prepare a consolidated balance sheet for December 31, 2015.

Additional information for Tower

2016

Net Income

70,000

Dividends

10,000

Alpha uses the sophisticated equity method to account for its investment in Tower.

• Prepare the Journal Entries that Alpha would make during 2016 relating to its investment in Tower.
• Prepare the worksheet journal entries necessary for Alpha to prepare consolidated financial statements for December 31, 2016.