5. Myers Company Ltd. was formed 10 years ago by the issuance of 35,000 common shares to three shareholders. Four years later, the company went public and issued an additional 30,000 common shares.

The management of Myers is considering a takeover in which Myers would purchase all of the assets and assume all of the liabilities of Norris Inc. Two alternative proposals are being considered:

PROPOSAL 1

Myers would offer to pay $459,900 cash for the Norris net assets. In addition, Myers would incur legal, appraisal, and finders fees for a total cost of $6,300.

PROPOSAL 2

Myers would issue 63,000 shares currently trading at $7.30 each for the Norris net assets. Other costs associated with the takeover would be as follows:

Legal, appraisal, and finders fees	$	6,300
Costs of issuing shares		8,300
	$	14,600

Norris shareholders would be offered five seats on the 10-member board of directors of Myers, and the management of Norris would be absorbed into the surviving company.

Balance sheet data for the two companies prior to the combination are as follows:

	Myers				Norris
	Carrying Amount				Carrying Amount				Fair Value
Cash	$	543,000			$	65,500			$	65,500
Accounts receivable		180,200				74,450				69,200
Inventory		387,120				123,110				147,220
Land		978,000				88,000				223,000
Buildings (net)		263,505				34,020				37,020
Equipment (net)		91,945				30,705				28,945
	$	2,443,770			$	415,785
Current liabilities	$	146,335			$	54,115				54,115
Non-current liabilities		530,000				163,000				168,000
Common shares		513,000				113,000
Retained earnings		1,254,435				85,670
	$	2,443,770			$	415,785

Required:

(a) Prepare the journal entries of Myers for each of the two proposals being considered. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Proposal 1

Proposal 2

(b) Prepare the balance sheet of Myers after the takeover for each of the proposals being considered.

Proposal 1

Proposal 2