The Balance Sheet of Mongol Company on December 31, 2006

Essay

The balance sheet of Mongol Company on December 31, 2006, prior to its merger with Solway Corporation, was as follows:
On December 31, 2006, Solway issued 60,000 of its $10 par (current fair value $15) common stock for all the outstanding common stock of Mongol, which was then liquidated. Also on December 31, 2006, Solway paid $60,000 out-of-pocket costs in connection with the business combination, of which $25,000 were finder's, accounting, and legal fees directly related to the combination, and $35,000 were costs of registering and issuing the common stock to effect the combination. Current fair values of Mongol's inventories and plant assets were $180,000 and $620,000, respectively; other assets and liabilities had current fair values equal to their carrying amounts.
Prepare journal entries on December 31, 2006, for Solway Corporation to record the business combination with Mongol Company. Disregard income taxes.