On June 30, 2024, Sundown Company reported the following account balances:

On June 30, 2024, Pelcore Company paid $310,800 cash for all assets and liabilities of Sundown, which will cease to exist as a separate entity. In connection with the acquisition, Pelcore paid $15,100 in legal fees. Pelcore also agreed to pay $55,600 to the former owners of Sundown contingent on meeting certain revenue goals during 2025. Pelcore estimated the present value of its probability adjusted expected payment for the contingency at $17,900.

In determining its offer, Pelcore noted the following pertaining to Sundown:

∙ It holds a building with a fair value $43,100 more than its book value.

∙ It has developed a database appraised at $25,200, although it is not recorded in its financial records.

∙ It has research and development activity in process with an appraised fair value of $36,400. However, the project has not yet reached technological feasibility, and the assets used in the activity have no alternative future use.

∙ Book values for the receivables, inventory, equipment, and liabilities approximate fair values.

Prepare Pelcore’s accounting entries to record the combination with Sundown.

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Receivables Inventory Buildings (net) Equipment (net) Total assets $83,900 70,250 78,900 24,100 $257,150 Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and equities $ (12,900) (54,250) (90,000) (100,000) $(257,150)