Pat Corporation paid $5,000,000 for Saw Corporation's voting common stock on January 2, 2011, and Saw was dissolved. The purchase price consisted of 100,000 shares of Pat's common stock with a market value of $4,000,000, plus $1,000,000 cash. In addition, Pat paid $100,000 for registering and issuing the 100,000 shares of common stock and $200,000 for other costs of combination. Balance sheet information for the companies immediately before the acquisition is summarized as follows (in thousands):
REQUIRED
1. Prepare journal entries for Pat Corporation to record its acquisition of Saw Corporation, including all allocations to individual asset and liability accounts.
2. Prepare a balance sheet for Pat Corporation on January 2, 2011, immediately after the acquisition and dissolution of Saw.