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Bagley Incorporateds statement of financial position as at July 31, Year 4, is as follows: BAGLEY INCORPORATED STATEMENT OF FINANCIAL POSITION At July 31, Year 4 Carrying Amount Fair Value Plant and equipment (net) $ 918,000 $ 1,061,000 Patents - 86,000 Current assets 463,000 515,000 $ 1,381,000 Ordinary shares $ 190,000 Retained earnings 512,000 Long-term debt 398,000 424,000 Current liabilities 281,000 281,000 $ 1,381,000 On August 1, Year 4, the directors of Bagley considered a takeover offer from Davis Inc., in which the corporation would sell all of its assets and liabilities. Daviss costs of investigation and drawing up the merger would amount to $23,500.

Required:) Assume that Davis made a $1,200,600 cash payment to Bagley for its net assets. Prepare the journal entries in the accounting records of Davis to record the business combination. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

(b) Assume that Davis issued 138,000 ordinary shares, with a market value of $8.70 per share, to Bagley for its net assets. Legal fees associated with issuing these shares amounted to $7,300 and were paid in cash. Davis had 158,000 shares outstanding prior to the takeover.

(i) Prepare the journal entries in the records of Davis to record the business combination. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) (ii) Prepare the statement of financial position of Bagley immediately after the sale.

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