Myers Company Ltd. was formed 10 years ago by the issuance of 34,000 common shares to three shareholders. Four years later, the company went public and issued an additional 30,000 common shares.

The management of Myers is considering a takeover in which Myers would purchase all of the assets and assume all of the liabilities of Norris Inc. Two alternative proposals are being considered:

PROPOSAL 1

Myers would offer to pay $446,400 cash for the Norris net assets. In addition, Myers would incur legal, appraisal, and finders fees for a total cost of $6,200.

PROPOSAL 2

Myers would issue 62,000 shares currently trading at $7.20 each for the Norris net assets. Other costs associated with the takeover would be as follows:

Legal, appraisal, and finders fees	$	6,200
Costs of issuing shares		8,200
	$	14,400

Norris shareholders would be offered five seats on the 10-member board of directors of Myers, and the management of Norris would be absorbed into the surviving company.

Balance sheet data for the two companies prior to the combination are as follows:

	Myers				Norris
	Carrying Amount				Carrying Amount				Fair Value
Cash	$	552,000			$	64,500			$	64,500
Accounts receivable		179,200				73,450				68,200
Inventory		386,120				122,110				146,220
Land		437,000				87,000				222,000
Buildings (net)		262,505				33,020				36,020
Equipment (net)		90,945				29,705				27,945
	$	1,907,770			$	409,785
Current liabilities	$	145,335			$	53,115				53,115
Non-current liabilities		400,000				162,000				167,000
Common shares		512,000				112,000
Retained earnings		850,435				82,670
	$	1,907,770			$	409,785

Required:

(a) Prepare the journal entries of Myers for each of the two proposals being considered. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Proposal 1

Proposal 2

(b) Prepare the balance sheet of Myers after the takeover for each of the proposals being considered.

Proposal 1

Proposal 2