The balance sheets of Lanigan Ltd. and Macklin Co. on December 31, Year 2, just before the transaction described below, were as follows:

On December 31, Year 2, Lanigan purchased all of Macklin’s assets and assumed all of Macklin’s liabilities for $250,000 in cash. Coincidentally, the carrying amounts of Macklin’s assets and liabilities were equal to fair value. 

Required 

(a) Prepare the journal entries for Lanigan Ltd. and for Macklin Co. to record this transaction. 

(b) Prepare balance sheets for Lanigan Ltd. and for Macklin Co. at December 31, Year 2, after recording the transaction noted above.

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Cash and receivables Inventory Buildings and equipment (net) Current liabilities Long-term debt Common shares Retained earnings Lanigan $ 602,000 210,000 320,000 $1,132,000 $ 192,000 350,000 200,000 390,000 $1,132,000 Macklin $ 155,000 110,000 200,000 $465,000 $85,000 130,000 110,000 140,000 $465,000