On June 30, 2016 Carl Corporation purchased Lin Company by issuing 50,000 shares of stock. Stock has a market value of $15.00 per share. This acquisition is to be recorded as a statuttory merger through asset acquisition. In this type of business combination Carl company acquires all the assets and liabilities of Lin Company. Lin Company is dissolved and goes out of business. Prepare the entries the purchase and combination on June 30, 2016.

Following information is shown prior to the merger activity being recorded:

Carl Company

Assets Liabilities and Capital

Cash $ 80,000 Current Liabilities $ 80,000

Inventories 80,000

Plant 300,000 Common Stock $5 PV 10,000

Land 20,000 Additional Paid in Capital 190,000

Retained Earnings 200,000

Total $480,000 Total $480,000

Lin Company

Assets Liabilities and Capital

Cash $200,000 Current Liabilities $100,000

Accounts Receivable 20,000 Common Stock $10 PV 150,000

Plant Assets 530,000 Additional Paid in Capital 400,000

Retained Earnings 100,000

Total $750,000 Total $750,000

Other information:

The Lin Company Plant Assets fair market value is $600,000.

The out of pocket costs of the merger are:

SEC Registration Statement fee $20,000

Legal fees for the SEC Registration Statement $15,000

Accounting fees for the SEC Registration Statement $ 5,000

Finders Fee $ 6,000

Legal fees for the merger $ 2,000

Accounting fees for the merger $ 4,000

1. Prepare and post the entries to record this as a statuttory merger. In a statuttory merger permanent dissolution of the subsidiary occurs at the combination date.

2. Prepare an after merger balance sheet.