Patel Company issued 95,000 shares of $1 par value common stock (market value of $6 share) for 95% of the common stock of Seely Company on January 1, 2011. Seely Company had the following assets, liabilities, and owners’ equity at that time:

Required:
A. Prepare the stock acquisition entry on the books of Patel Company, taking into account tax effects. Assume an income tax rate of 40%.
B. Prepare eliminating entries for the preparation of a consolidated balance sheet work-paper on January 1,2011.

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Book Value/Tax Basis Fair Value Difference Cash Accounts receivable Inventory (LIFO) Land Plant assets (net) 20,000 112,000 82,000 30,000 392,000 $636,000 $ 20,000 112,000 134,000 55,000 463,000 $784,000 一0一 52,000 25,000 71,000 $148,000 Total assets 10,000 54,000 200,000 80,000 132,000 160,000 $636,000 Allowance for uncollectible accounts 10,000 54,000 180,000 ccounts payable Bonds payable Common stock, $1 par value Other contributed capital Retained earnings 20,000 Total equities