Hendrie Incorporated acquired all of the assets and liabilities of Smith Corporation for $ 1,250,000 cash on 1 January. he book values and fair values of the assets of XYZ as of the date of acquisition were:

In addition, XYZ had liabilities totaling $ 320,000 at the date of acquisition and a customer list estimated to have a fair value based on discounted future cash lows of $ 75,000.

Required:
1. Prepare the journal entry necessary for Hendrie Incorporated to record the acquisition. 2. Prepare the journal entry necessary for Hendrie Incorporated to record the acquisition assuming the purchase price was $ 1,200,000. It was determined that the value of all of the assets wasreasonable.

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Book Value Fair Value Accounts receivable Inventory Property, plant, and equipment Land $150,000 225,000 300,000 200,000 $150,000 350,000 550,000 400,000