ced Accounting EXERCISE 1. Proust Corporation is considering a merger with Seville Company. After considerable negotiations, the two companies determined that two shares of Seville Company stock would be replaced with one share of Proust stock. The balance sheets of the two companies are below, along with the fair value of Seville's identifiable net assets. At this time, Proust's stock is selling for $50 a share, and Seville's stock is selling for $25. Seville Seville's Fair Values Cash Proust $ 50,000 $ 30,000 Receivables. Inventories Plant & Equipment (Net) Total Assets Liabilities Common Stock, $10 par 20,000 15,000 150,000 15,000 20,000 80,000 $ 30,000 14,000 23,000 95,000 $235,000 $145,000 $ 25,000 $ 10,000, $ 10,000 100,000 75,000 Other Contributed Capital 50,000 20,000 Retained Earnings 60.000 40,000 Total Lia & Equities $235,000 $145,000 Required: A. Assume the merger will be accounted for as an acquisition. Determine the value of the stock issued and the resulting cost of the merger to Proust. Determine any goodwill. B. Prepare journal entries for the Proust Company after the merger.