Myers Company Ltd. was formed 10 years ago by the issuance of 26,000 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 $453,600 cash for the Norris net assets. In addition, Myers would incur legal, appraisal, and finders fees for a total cost of $5,400.

PROPOSAL 2

Myers would issue 54,000 shares currently trading at $8.40 each for the Norris net assets. Other costs associated with the takeover would be as follows:

Legal, appraisal, and finders fees	$	5,400
Costs of issuing shares		7,400
	$	12,800

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	$	534,000			$	56,500			$	56,500
Accounts receivable		171,200				65,450				60,200
Inventory		378,120				114,110				138,220
Land		489,000				79,000				214,000
Buildings (net)		254,505				25,020				28,020
Equipment (net)		82,945				21,705				19,945
	$	1,909,770			$	361,785
Current liabilities	$	137,335			$	45,115				45,115
Non-current liabilities		450,000				154,000				159,000
Common shares		504,000				104,000
Retained earnings		818,435				58,670
	$	1,909,770			$	361,785

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