Problem

The stockholders’ equities of Pal Corporation and Sip Corporation at January 1 were as fol...

The stockholders’ equities of Pal Corporation and Sip Corporation at January 1 were as follows (in thousands):

 

Pal

Sip

Capital stock, $10 par

$6,000

$3,200

Other paid-in capital

800

1,600

Retained earnings

2,400

1,200

Stockholders’ equity

$9,200

$6,000

On January 2, Pal issued 600,000 of its shares with a market value of $20 per share for all of Sip’s shares, and Sip was dissolved. On the same day, Pal paid $20,000 to register and issue the shares and $40,000 for other direct costs of combination.

REQUIRED: Prepare the stockholders’ equity section of Pal Corporation’s balance sheet immediately after the acquisition on January 2. (Hint: Prepare the journal entry.)

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