H1-2

Apple Corporation issued 6,000 shares of its $2 par value common stock at a market price of $10 per share to acquire all the outstanding common stock of Barry Corporation. Apple paid $5,000 of legal fees for this business combination and $3000 for issuing the securities. Barry was merged into Apple and dissolved. Information for Barry Corporation immediately before the merger is as follows:

	Book value	Fair value
Cash	6,000	6,000
Receivables	14,000	13,000
Equipment	50,000	45,000
Patents		10,000
Total	70,000	74,000
Accounts payable	25,000	25,000
Common stock	2,000
Add. paid-in capital	14,000
Retained earnings	29,000
Total	70,000

Prepare the journal entries on Apple Corporations books to account for the business combination.

H1-3 Same information as H1-2 except that Apple issued 5,000 shares of its common stock at a market price of $8.50 per share to acquire all the outstanding common stock of Barry Corporation. Determine the gain from bargain purchase reported by Apple for the business combination.