Clipboa A22 Required (SHOW. B D 1 Problem #1 (15 pts) On January 2, 2021, Cassandra Inc. acquired all of Hecuba Company's voting common stock by paying $250,000 cash and issuing 10,000 shares of its own $30 par value common stock when the market price was $32 per share. Hecuba Company was dissolved on the date of the acquisition. Cassandra paid cash for acquisition- related legal and accounting fees amounting to $35,000 and cash for acquisition-related stock issuance costs of $8,000. Balance Sheet information for the companies immediately before the acquisition is summarized as follows. Hecuba Company 2 3 4 5 Cash 6 Accounts receivable-net 7 Inventories 8 Land Cassandra Inc. Book Value Book Value Fair Value $490,000 $140,000 $140,000 560,000 280,000 280,000 520,000 200,000 260,000 460,000 150000 140,000 9 Plant Assets-net 980,000 325000 355,000 10 Construction permits 380,000 170,000 190,000 11 Total Assets $3,390,000 $1,265,000 $1,365,000 12 13 Accounts payable $460,000 $140,000 $140,000 14 Other accrued expenses 160,000 45,000 $45,000 15 Notes payable 800,000 460,000 $460,000 16 Common stock, $30 par 960,000 17 Common stock, $20 par 200,000 18 Additional paid-in capital 192,000 80000 19 Retained Earnings 20 Total Liabilities & Equities 818,000 $3,390,000 340000 $1,265,000 21 Required (SHOW ALL YOUR WORK CLEARLY-Points will be deducted if no work shown). 1. (3 pts) Calculate goodwill or gain from bargain purchase resulting from this acquisition. 2. (9 pts) Prepare all journal entries on Cassandra Inc.'s books to record the acquisition. 3. (3 pts) Calculate the ending balance of Retained Earnings on the balance sheet for Cassandra Inc. immediately 22 after the business combination. 23 24