View the step-by-step solution to: On January 1, 20X8, Alaska Corporation acquired Mercantile

On January 1, 20X8, Alaska Corporation acquired Mercantile Corporation's net assets by paying $160,000 cash. Balance sheet data for the two companies and fair value information for Mercantile Corporation immediately before the business combination are given below: Alaska Mercantile Book Value Book Value Fair Value Cash $200,000 $30,000 $30,000 Accounts receivable 40,000 22,000 22,000 Inventory 120,000 25,000 36,000 Patents 50,000 20,000 40,000 Buildings and Equipm. 330,000 250,000 150,000 Less: Acc. Deprec. -140,000 -150,000 Total Assets $600,000 $197,000 $278,000 Accounts payable $85,000 $55,000 $55,000 Notes Payable 100,000 80,000 80,000 Common Stock: $5 par value 120,000 $2 par value 20,000 Additional Paid-In Capital 140,000 25,000 Retained Earnings 155,000 17,000 Total Liabilities And Equities $600,000 $197,000 Required: Prepare the journal entry to record the acquisition of Mercantile Corporation.
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