Journal entries and balance sheet for an acquisition

On January 2, 2016, Pam Corporation issues its own $10 par common stock for all the outstanding

stock of Sun Corporation in an acquisition. Sun is dissolved. In addition, Pam pays $40,000 for registering

and issuing securities and $60,000 for other costs of combination. The market price of Pam's

stock on January 2, 2016, is $60 per share. Relevant balance sheet information for Pam and Sun

Corporations on December 31, 2015, just before the combination, is as follows (in thousands):

Pam Historical Cost Sun Historical Cost Sun Fair Value

Cash $ 240 $ 20 $ 20

Inventories 100 60 120

Other current assets 200 180 200

Land 160 40 200

Plant and equipmentnet 1,300 400 700

Total assets $2,000 $700 $1,240

Liabilities $ 400 $100 $ 100

Capital stock, $10 par 1,000 200

Additional paid-in capital 400 100

Retained earnings 200 300

Total liabilities and owners' equity $2,000 $700

REQUIRED

1. Assume that Pam issues 25,000 shares of its stock for all of Sun's outstanding shares.

a. Prepare journal entries to record the acquisition of Sun.

b. Prepare balance sheet for Pam Corporation immediately after the acquisition