Create a new journal entry or entries for the acquisition

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Hercules Corporation purchased the assets and assumed the liabilities of Zeus, Inc. by issuing 87,000 shares of Hercules Corporation common stock (par = $2 per share; market = $10 per share). Zeus has cash of $84,000; receivables of $204,000; inventory of $17,000; property, plant & equipment (net) of $324,000; and liabilities of $189,000 on its balance sheet. Plant assets are worth 30% more than book value. In addition, there is an unrecorded trademark worth $42,000. Merger costs were $53,000 and stock issue costs were $39,000, both of which were paid in cash.

Question 1. Record this acquisition (including all cash outlays) in a journal entry or entries. Show individual assets.

Question 2. Assume the same facts as in question #1 except that the market price of Hercules' stock is $5 instead of $10. Create a new journal entry or entries for the acquisition.

Reference no: EM132503680

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