Condensed balance sheets for Phillips Company and Solina Company on January 1, 2013, are as follows:
Plant and equipment (net)450,000140,000
Common stock, $10 par value350,000160,000
Other contributed capital125,00053,000
Retained earnings (deficit)60,000(23,000)
Total liabilities and equities$630,000$225,000
On January 1, 2013, the stockholders of Phillips and Solina agreed to a consolidation. Because FASBrequires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Phillips wasacquiring Solina. Phillips agreed to issue 20,000 shares of its $10 par stock to acquire all the net assets of Solinaat a time when the fair value of Phillips’ common stock was $15 per share.
On the date of consolidation, the fair values of Solina’s current assets and liabilities were equal to their bookvalues. The fair value of plant and equipment was, however, $150,000. Phillips will incur $20,000 of direct acqui-sition costs and $6,000 in stock issue costs.
Required:Prepare the journal entries on the books of Phillips to record the acquisition of Solina Company’s net assets.