EXERCISE 2-1 Asset Purchase LO 6 Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Company's balance sheet was as follows: Book Value Fair Value Cash $ 120,000 $ 120,000 Receivables (net) 192,000 228,000 Inventory 360,000 396,000 Plant and equipment (net) 480,000 540,000 Land 420,000 660,000 Total assets $1,572,000 $1,944,000 Liabilities Common stock ($5 par value) Other contributed capital $ 540,000 $ 594,000 480,000 132,000 Retained earnings 420,000 $1,572,000 Required: Total equities A. Prepare the journal entries on the books of Preston Company to record the purchase of the assets and assumption of the liabilities of Saville Company if the amount paid was $1,560,000 in cash. B. Repeat the requirement in (A) assuming that the amount paid was $990,000.