On January 2, 2011, Potter Company acquired 90% of the outstanding common stock of Smiley Company for $480,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows: Potter Smiley Cash $ 650,000 $ 160,000 Accounts Receivable (net) 360,000 60,000 Inventory 290,000 140,000 Plant and Equipment (net) 970,000 240,000 Land 150,000 80,000 Total Assets $2,420,000 $680,000 Accounts Payable $ 260,000 $ 120,000 Mortgage Payable 180,000 100,000 Common Stock, $2 par value 1,000,000 170,000 Other Contributed Capital 520,000 50,000 Retained Earnings 460,000 240,000 Total Equities $2,420,000 $680,000 The fair values of Smiley's assets and liabilities are equal to their book values with the exception of land. Required:
A. Prepare the journal entry necessary to record the purchase of Smiley's common stock.
B. Prepare a consolidated balance sheet at the date of acquisition.