1. On January 2, 2022, Bread Corporation issued 100,000 new shares of its $5 par value common stock valued at
$19 a share for all of Dilan Corporation's outstanding common shares. Bread paid $15,000 to register and issue
shares. Bread also paid $10,000 for the direct combination costs of the accountants. The fair value and book value
of Dilan's identifiable assets and liabilities were the same. Summarized balance sheet information for both
companies just before the acquisition on January 2, 2022, is as follows:
Bread
Dilan
Cash
$ 150,000
$ 120,000
Inventories
320,000
400,000
Other current assets
500,000
500,000
Land
350,000
250,000
Plant assets-net
4,000,000
1,500.000
Total Assets
$5,320,000
$2,770,000
Accounts payable
$1,000,000
$ 300,000
Notes payable
1,300,000
660,000
Capital stock, $5 par
2,000,000
500,000
Paid-in capital
1,000,000
100,000
Retained Earnings
20,000
1,210,000
Total Liabilities & Equities
$5,320,000
$2,770,000
Required:
1. Prepare Bread's general journal entry for the acquisition of Dilan if Dilan survives as a separate legal entity.
(5 points)
2. Prepare Bread's general journal entry for the acquisition of Dilan if Dilan will dissolve as a separate legal entity.
(5 points)
