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

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

Note: Parentheses indicate a credit balance.

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 entry to record its acquisition of Westmont.

General Journal	Debit	Credit
To record acquisition of Westmont Company.
Inventory
Land
Buildings
Customer Relationships
Goodwill
Accounts Payable
Common Stock
Additional Paid-In Capital
Cash
To record legal fees related to the combination.
Professional Services Expense	42,000
Cash		42,000
To record payment of stock issuance costs.
Additional Paid-In Capital	25,000
Cash		25,000