On 1/1/X2, Peanut enters into a business combination with Strawberry in which Strawberry is dissolved. Peanut issues30,000shares of its stock in exchange for all of the outstanding stock of Strawberry. In addition, Peanut pays the following costs in cash at the time of the merger:

Cost of printing stock certificates

$8,000

Finders' Fee

45,000

Legal fees to negotiate merger terms

10,000

Accountant's fee for preparation of stock registration statement

40,000

Total

$103,000

At the time of the stock issue, Peanut's shares were selling for$18per share and Strawberry's shares were selling for$15per share.

Balance sheets and fair value information for the two companies on December 31, X1 were as follows:

Assets:

Peanut

Book Value

Peanut

Fair Value

Strawberry

Book Value

Strawberry

Fair Value

Cash

$380,000

$380,000

$80,000

$80,000

Inventory

920,000

1,000,000

180,000

210,000

Land

300,000

400,000

100,000

120,000

Buildings

600,000

800,000

300,000

200,000

Equipment

400,000

500,000

100,000

100,000

Patents

200,000

300,000

0

180,000

Total Assets

$2,800,000

$3,380,000

$ 760,000

$890,000

Liabilities & Equity:

Notes Payable

$900,000

$1,000,000

$ 240,000

$220,000

Capital Stock, $10 par

800,000

300,000

Additional Paid In Capital

600,000

50,000

Retained Earnings

500,000

170,000

Total Liabilities & Equity

$2,800,000

$ 760,000

Required:

Prepare the necessary journal entries on Peanut's books to record the merger assuming that Strawberry is dissolved (Hint: there are 3 journal entries)