On January 1, Pan Corporation pays $400,000 cash and also issues 36,000 shares of $10 par common stock with a
market value of $660,000 for all the outstanding common shares of Sis Corporation. In addition, Pan pays $60,000
for registering and issuing the 36,000 shares and $140,000 for the other direct costs of the business combination,
in which Sis Corporation is dissolved. Summary balance sheet information for the companies immediately before the
merger is as follows (in thousands):
Pan Book
Value
Sis Book
Value
Sis Fair
Value
Cash $700 $ 80 $ 80
Inventories 240 160 200
Other current assets 60 40 40
Plant assets—net 520 360 560
Total assets $1,520 $640 $880
Current liabilities $320 $ 60 $ 60
Other liabilities 160 100 80
Common stock, $10 par 840 400
Retained earnings 200 80
Total liabilities and
owners’ equity
$1,520 $640
REQUIRED:Prepare all journal entries on Pan’s books to account for the acquisition.
P R