P 1-5 Journal entries and balance sheet for an acquisition Pat Corporation paid $5,000,000 for Saw Corporation's voting common stock on January 2, 201 1, and Saw was dissolved. The purchase price consisted of 100,000 shares of Pat's common stock with a market value of $4,000,000, plus $1,000,000 cash. In addition, Pat paid $100,000 for registering and issuing the 100,000 shares of common stock and $200,000 for other costs of combination. Balance sheet information for the companies immediately before the acquisition is summarized as follows (in thousands): Book Value Book Value Fair Value Cash 5 6.000 $ 480 $ 480 Accounts receivable-net 2.600 720 720 Notes receivable-net 3,000 600 600 Inventories 5,000 840 1,000 Other current assets 1,400 360 400 Land 4.000 200 400 Buildings-net 18.000 1.200 2,400 Equipment-net 20.000 1.600 1.200 Total assets $60.000 $6,000 $7,200 Accounts payable $ 2,000 $ 600 $ 600 Mortgage payable-10% 10.000 1,400 1,200 Capital stock, $10 par 20.000 2.000 Other paid-in capital 16,000 1.200 Retained earnings 12.000 800 Total equities $60.000 $6.000 24 CHAPTER 1 REQUIRED 1. Prepare journal entries for Pat Corporation to record its acquisition of Saw Corporation, including all al- locations to individual asset and liability accounts. 2. Prepare a balance sheet for Pat Corporation on January 2, 201 1, immediately after the acquisition and dis- solution of Saw