On January 1, 20X0, Hunter Corporation issued 8,000 of its $10 par value shares to acquire 45 percent of the shares of Arrow Manufacturing. Arrow Manufacturing's balance sheet immediately before the acquisition contained the following items:

ARROW MANUFACTURING Balance Sheet January 1, 20X0
	Book Value				Fair Value
Assets
Cash and Receivables		$	39,000			$	39,000
Land			88,000				98,000
Buildings & Equipment (net)			128,000				158,000
Patent			98,000				98,000
Total Assets			353,000
Liabilities & Equities
Accounts Payable		$	171,000				171,000
Common Stock			136,000
Retained Earnings			46,000
Total Liabilities & Equities		$	353,000

On the date of the stock acquisition, Hunter's shares were selling at $35, and Arrow Manufacturing's buildings and equipment had a remaining economic life of 5 years. The amount of the differential assigned to goodwill is not impaired.

In the two years following the stock acquisition, Arrow Manufacturing reported net income of $87,000 and $57,000 and paid dividends of $29,000 and $47,000, respectively. Hunter used the equity method in accounting for its ownership of Arrow Manufacturing.

Required:

a.

Prepare the entry recorded by Hunter Corporation at the time of acquisition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal Entry Worksheet

Record the acquisition of Arrow Manufacturing stock.

Event

General Journal

Debit

Credit

1

*Enter debits before credits