Question - Pretzel Company acquired the assets (except for cash) and assumed the liabilities of Salt Company on January 2, 2005. As compensation, Pretzel Company gave 30,000 shares of its common stock, 15,000 shares of its 10% preferred stock, and cash of $50,000 to the stockholders of Salt Company. On the acquisition date, Pretzel Company stock had the following characteristics:

Pretzel Company Stock Par Value Fair Value

Common $ 10 $ 25

Preferred 100 100

Immediately prior to the acquisition, Salt Company's balance sheet reported the following book values and fair values:

SALT COMPANY Balance Sheet January 2, 2005

Book Value Fair Value

Cash $ 165,000 $ 165,000

Accounts receivable (net of $11,000 allowance) 220,000 198,000

Inventory - LIFO cost 275,000 330,000

Land 396,000 550,000

Buildings and equipment (net) 1,144,000 1,144,000

Total assets $ 2,200,000

$ 2,387,000

Current liabilities $ 275,000 $ 275,000

Bonds Payable, 10% 450,000 495,000

Common stock, $5 par value 770,000

Other contributed capital 396,000

Retained earnings 219,000

Total liabilities and stockholders' equity $ 2,110,000

Required: Prepare the journal entry on the books of Pretzel Company to record the acquisition of the assets and assumption of the liabilities of Salt Company.