On January 1, NewTune Company exchanges 18,100 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTunes shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Gos fair value. NewTune also paid $33,500 in stock registration and issuance costs in connection with the merger.

Several of On-the-Gos accounts fair values differ from their book values on this date:

	Book Values				Fair Values
Receivables	$	68,750			$	66,000
Trademarks		113,250				282,000
Record music catalog		68,750				227,000
In-process research and development		0				271,500
Notes payable		(72,250	)			(65,700	)

Precombination book values for the two companies are as follows:

	NewTune				On-the-Go
Cash	$	70,750			$	40,500
Receivables		30,250				68,750
Trademarks		486,000				113,250
Record music catalog		853,000				68,750
Equipment (net)		413,000				110,000
Totals	$	1,853,000			$	401,250
Accounts payable	$	(177,000	)		$	(56,000	)
Notes payable		(379,000	)			(72,250	)
Common stock		(400,000	)			(50,000	)
Additional paid-in capital		(30,000	)			(30,000	)
Retained earnings		(867,000	)			(193,000	)
Totals	$	(1,853,000	)		$	(113,250	)

1. Assume that this combination is a statutory merger so that On-the-Gos accounts will be transferred to the records of NewTune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for NewTune as of the acquisition date.
2. Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date.