Myers Company Ltd. was formed 10 years ago by the issuance of 22,000 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 outstanding common shares of Norris Inc. Two alternative proposals are being considered:

PROPOSAL 1

Myers would offer to pay $400,000 cash for the Norris common shares. In addition, Myers would incur legal, appraisal, and finders fees for a total cost of $5,000.

PROPOSAL 2

Myers would issue 50,000 shares currently trading at $8.00 each for the Norris common shares. Other costs associated with the takeover would be as follows:

Legal, appraisal, and finders fees	$	5,000
Costs of issuing shares		7,000
	$	12,000

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	$	550,000			$	52,500		$	52,500
Accounts receivable		167,200				61,450			56,200
Inventory		374,120				110,110			134,220
Land		425,000				75,000			210,000
Buildings (net)		250,505				21,020			24,020
Equipment (net)		78,945				17,705			15,945
	$	1,845,770			$	337,785
Current liabilities	$	133,335			$	41,115			41,115
Non-current liabilities		410,000				150,000			155,000
Common shares		500,000				100,000
Retained earnings		802,435				46,670
	$	1,845,770			$	337,785

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 consolidated balance sheet of Myers after the takeover for each of the proposals being considered.

Proposal 1

Proposal 2