Bagley Incorporateds statement of financial position as at July 31, Year 4, is as follows: BAGLEY INCORPORATED STATEMENT OF FINANCIAL POSITION At July 31, Year 4 Carrying Amount Fair Value Plant and equipment (net) $ 911,000 $ 1,054,000 Patents - 79,000 Current assets 456,000 508,000 $ 1,367,000 Ordinary shares $ 183,000 Retained earnings 519,000 Long-term debt 391,000 417,000 Current liabilities 274,000 274,000 $ 1,367,000 On August 1, Year 4, the directors of Bagley considered a takeover offer from Davis Inc., whereby the corporation would sell all of its assets and liabilities. Daviss costs of investigation and drawing up the merger agreement would amount to

Journal entry worksheet

Note: Enter debits before credits.

Record the acquisition of net assets of Bagley Incorporated in Davis Inc's books

Transaction	General Journal	Debit	Credit
1

Note: Enter debits before credits.

Record the $20,000 cash paid for professional fees expense

Transaction	General Journal	Debit	Credit
2

b) Assume that Davis issued 131,000 ordinary shares, with a market value of $8.00 per share, to Bagley for its net assets. Legal fees associated with issuing these shares amounted to $6,600 and were paid in cash. Davis had 151,000 shares outstanding prior to the takeover.

(i) Prepare the journal entries in the records of Davis to record the business combination. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1

ii) Prepare the statement of financial position of Bagley immediately after the sale.