Problem 5

During the current year, Bradley Company acquired all of the outstanding common stock of Cortez Inc. paying $12,000,000 cash. The book values and fair values of Cortezs assets and liabilities acquired are listed below:

Book Value Fair Value

Accounts receivable $1,800,000 $1,625,000

Inventories 2,700,000 4,000,000

Property, plant, and equipment 9,000,000 11,625,000

Accounts payable 3,000,000 3,000,000

Bonds payable 4,500,000 4,125,000

Required:

Prepare the journal entry to record the acquisition by Bradley Company.