The Poonamalie Company paid $4,000,000 in cash to the shareholders of the Slys Company for all of Slys' outstanding shares. Attorneys' fees related to the combination were $175,000, paid in cash. A comparison of the book and fair values of Slys' assets and liabilities appears below:

Required
a. Prepare the journal entry made by Poonamalie to record the business combination as a statutory merger.
b. Prepare the journal entry made by Poonamalie to record the business combination as a stock acquisition.

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Book Value Fair Value $ 120,000 200,000 400,000 1,000,000 (340,000) (1,100,000) 280,000 Equity method investments Inventory. 175,000 610,000 1,600,000 (340,000) ..(1,090,000)