10) Pali Corporation exchanges 200,000 shares of newly issued $10 par value common stock with a fair market value of $40 per share for all the outstanding $5 par value common stock of Shingle Incorporated, which continues on as a legal entity. Fair value approximated book value for all assets and liabilities of Shingle. Pali paid the following costs and expenses related to the business combination:
Registering and issuing securities19,000
Accounting and legal fees150,000
Salaries of Pali's employees whose
time was dedicated to the merger86,000
Cost of closing duplicate facilities223,000
Required: Prepare the journal entries relating to the above acquisition and payments incurred by Pali, assuming all costs were paid in cash.