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)	$	912,000		$	1,055,000
Patents		-			80,000
Current assets		457,000			509,000
	$	1,369,000
Ordinary shares	$	184,000
Retained earnings		518,000
Long-term debt		392,000			418,000
Current liabilities		275,000			275,000
	$	1,369,000

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 $20,500.

Required:

(a) Assume that Davis made a $1,069,200 cash payment to Bagley for its net assets. Prepare the journal entries in the accounting 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.)

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

Record the $20,500 cash paid for professional fees expense.

b) Assume that Davis issued 132,000 ordinary shares, with a market value of $8.10 per share, to Bagley for its net assets. Legal fees associated with issuing these shares amounted to $6,700 and were paid in cash. Davis had 152,000 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.)

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

Record the payment of $6,700 legal fees for the issue of 132,000 equity shares at a market value of $8.10 per share.

Record the $21,000 cash paid for professional fees expense.

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