Myers Company Ltd. was formed 10 years ago by the issuance of 42,000 common shares to three shareholders. Four years later, the company went public and issued an additional 30,000 common shares.

The management of Myers is considering a takeover in which Myers would purchase all of the assets and assume all of the liabilities of Norris Inc. Two alternative proposals are being considered:

PROPOSAL 1

Myers would offer to pay $560,000 cash for the Norris net assets. In addition, Myers would incur legal, appraisal, and finders fees for a total cost of $7,000.

PROPOSAL 2

Myers would issue 70,000 shares currently trading at $8.00 each for the Norris net assets. Other costs associated with the takeover would be as follows:

Legal, appraisal, and finders fees	$	7,000
Costs of issuing shares		9,000
	$	16,000

Norris shareholders would be offered five seats on the 10-member board of directors of Myers, and the management of Norris would be absorbed into the surviving company.

Balance sheet data for the two companies prior to the combination are as follows:

	Myers		Norris
	Carrying Amount		Carrying Amount		Fair Value
Cash	$	550,000			$	72,500			$	72,500
Accounts receivable		187,200				81,450				76,200
Inventory		394,120				130,110				154,220
Land		1,055,000				95,000				230,000
Buildings (net)		270,505				41,020				44,020
Equipment (net)		98,945				37,705				35,945
	$	2,555,770			$	457,785
Current liabilities	$	153,335			$	61,115				61,115
Non-current liabilities		600,000				170,000				175,000
Common shares		520,000				120,000
Retained earnings		1,282,435				106,670
	$	2,555,770			$	457,785

Required:

(a) Prepare the journal entries in the accounting records of Myers Company Ltd. to record the takeover of Norris Inc. under Proposal 1 and Proposal 2. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Proposal 1

Proposal 2

(b) Prepare the balance sheet of Myers after the takeover for each of the proposals being considered.

Proposal 1

Proposal 2