Problem 1:

On January 2, 2020 Palta Company issued 80,000 new shares of its $5 par value common stock valued at $12 a share for all of Sudina Corporation's outstanding common shares. Palta paid $5,000 for the direct combination costs of the accountants. Palta paid $18,000 to register and issue shares. The fair value and book value of Sudina's identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2020 is as follows:

Book-Value=

Book-Value Fair-Value

Palta Sudina

Cash $75,000 $60,000

Inventories 160,000 200,000

Other current assets 200,000 250,000

Land 175,000 125,000

Plant assets-net 1,500,000 750,000

Total Assets $2,110,000 $1,385,00

Accounts payable $100,000 $155,000

Notes payable 700,000 330,000

Capital stock, $2 par 600,000 250,000

Additional paid-in capital 450,000 50,000

Retained Earnings 260,000 600,000

Total Liabilities & Equity $2,110,000 $1,385,000

Required:

1. Prepare the entry to record the issuance of the 80,000 shares.
2. Prepare the entry to record the $5,000 payment for the direct costs.
3. Prepare the entry to record the $18,000 payment to register and issue the stock shares.
4. Prepare the entry to dissolve Sudina as a separate legal entity
5. How would part 4.) change if only 70,000 shares had been issued.