Exercise 2-1

Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Companys balance sheet was as follows:

		Book Value		Fair Value
Cash		$109,980		$109,980
Receivables (net)		190,180		209,800
Inventory		340,720		363,860
Plant and equipment (net)		492,240		577,650
Land		415,110		671,300
Total assets		$1,548,230		$1,932,590
Current Liabilities		$585,370		$538,200
Common stock ($5 par value)		449,960
Other contributed capital		128,990
Retained earnings		383,910
Total equities		$1,548,230

(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 $1,547,580 in cash. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)