Alison Ltd, after negotiations with Darley Ltd, acquired all the assets (except Cash at Bank and Shares in Alison Ltd) and all liabilities of Darley Ltd. Alison Ltd issued 300,000 fully paid $1 shares and paid $100,000 cash in satisfaction of the agreed purchase consideration. Darley Ltd is to continue as an investment company.

On the same date, Alison Ltd Acquired all 200,000 of the issued fully paid $1 shares in King Ltd at their current share market price of $3 each. The purchase consideration was settled by the issue of 300,000 fully paid $2 shares.

The summary Balance Sheet of Darley Ltd prior to the combination with Alison Ltd was as follows:

Assets:	$	$
Cash at bank		150,000
Inventory		100,000
Accounts Receivable	55,000
Less: Allowance for Doubtful Debts	5,000	50,000
Investment (includes $20,000 of 10% Unused Notes of Darley Ltd)		100,000
Other Non-Current Assets	250,000
Less: Accumulated Depreciation	150,000	100,000
		500,000
Liabilities:
Accounts Payable	40,000
8% Debentures	100,000	140,000
Net Assets		360,000
Equity
Share Capital		300,000
Retained Earnings		60,000
		360,000

Required:

a) Prepare Journal Entries in the books of Alison Ltd to record:

Purchase of Net Assets of Darley Ltd.

Settlement of Purchase Considerations to Darley Ltd.

Contra entries for inter-company accounts receivable and accounts payable.

Contra entries for inter-company indebtedness for Debentures and Unsecured Notes.

Purchase of Shares in King Ltd.

b) prepare a Balance Sheet for Alison Ltd after the combination.