Samantha's Sporting Goods had net assets consisting of the following:

Book Value Fair Value
Cash $150,000 $150,000
Inventory 820,000 960,000
Building and Fixtures 330,000 310,000
Liabilities (90,000 ) (88,000 )

Pedic Incorporated

purchased Samantha's Sporting Goods, and immediately dissolved Samantha's as a separate legal entity.

Requirement 1: If Samantha's was purchased for $1,000,000 cash, prepare the entry recorded by Pedic.

Requirement 2: If Samantha's was purchased for $1,500,000 cash, prepare the entry recorded by Pedic.
What will be an ideal response?

Requirement 1:
Cash* 150,000
Inventory 960,000
Building and Fixtures 310,000
Liabilities 88,000
Gain on Bargain Purchase 332,000
Cash* 1,000,000
*Cash entries may be recorded net on single line entry.

Requirement 2:
Cash* 150,000
Inventory 960,000
Building and Fixtures 310,000
Goodwill 168,000
Liabilities 88,000
Cash* 1,500,000
*Cash entries may be recorded net on single line entry.