Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Companys balance sheet was as follows:

Book ValueFair Value

Cash$122,900$122,900

Receivables (net)207,560232,240

Inventory361,510389,840

Plant and equipment (net)459,200573,420

Land417,050617,650

Total assets$1,568,220$1,936,050

Current Liabilities$526,250$596,650

Common stock ($5 par value)477,680

Other contributed capital126,920

Retained earnings437,370

Total equities$1,568,220

(a) Prepare the journal entries on the books of Preston Company to record the purchase of the assets and assumption of the liabilities of Saville Company if the amount paid was $1,567,060 in cash. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

(b) Repeat the requirement in (a) assuming that the amount paid was $917,030. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings

Cash Common Stock Gain on Business Combination Goodwill Inventory Land Liabilities Loss on Business Combination No Entry Other Contributed Capital Plant and Equipment Receivables Retained Earnings