Supernova Company had the following summarized balance sheet on December 31 of the current year:

Assets

Accounts receivable

$ 350,000

Inventory

450,000

Property and plant (net)

600,000

Total

$1,400,000

Liabilities and Equity

Notes payable

$ 600,000

Common stock, $5 par

300,000

Paid-in capital in excess of par

400,000

Retained earnings

100,000

Total

$1,400,000

The fair value of the inventory and property and plant is $600,000 and $850,000, respectively.

Assume that Redstar Corporation exchanges 75,000 of its $3 par value shares of common stock, when the fair price is $20 per share, for 100% of the common stock of Supernova Company.

Required:

a.

What journal entries will Redstar Corporation record for the investment in Supernova and issuance of stock?

b.

Prepare a supporting value analysis and determination and distribution of excess schedule

c.

Prepare Redstar's elimination of equity and adjustment for determination and distribution enties for the acquisition of Supernova.