Chapter 2, Problem 23P

The following book and fair values were available for Westmont Company as of March 1.

	Book Value	Fair Value
Inventory	$ 630,000	$ 600,000
Land	750,000	990,000
Buildings	1,700,000	2,000,000
Customer relationships	–0–	800,000
Accounts payable	(80,000)	(80,000)
Common stock	(2,000,000)
Additional paid-in capital	(500,000)
Retained earnings, 1/1	(360,000)
Revenues	(420,000)
Expenses	280,000

  Arturo Company pays $4,000,000 cash and issues 20,000 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,000 and Arturo pays $42,000 for legal fees to complete the transaction. Prepare Arturo’s journal entries to record its acquisition of Westmont.