Myers Company Ltd. was formed 10 years ago by the issuance of 30,000 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 $510,400 cash for the Norris net assets. In addition, Myers would incur legal, appraisal, and finders fees for a total cost of $5,800.

PROPOSAL 2

Myers would issue 58,000 shares currently trading at $8.80 each for the Norris net assets. Other costs associated with the takeover would be as follows:

Legal, appraisal, and finders fees	$	5,800
Costs of issuing shares		7,800
	$	13,600

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	$	538,000			$	60,500			$	60,500
Accounts receivable		175,200				69,450				64,200
Inventory		382,120				118,110				142,220
Land		533,000				83,000				218,000
Buildings (net)		258,505				29,020				32,020
Equipment (net)		86,945				25,705				23,945
	$	1,973,770			$	385,785
Current liabilities	$	141,335			$	49,115				49,115
Non-current liabilities		490,000				158,000				163,000
Common shares		508,000				108,000
Retained earnings		834,435				70,670
	$	1,973,770			$	385,785

Required:

(a) Prepare the journal entries in the accounting records of Myers Company Ltd. to record the takeover of Norris Inc. under Proposal 1 and Proposal 2. (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