II$.$ Statutory Merger $(30$ Points$)$

At December $31,2017,$ Pandora Incorporated issued $40,000$ shares of its $$20$ par common stock

for all net assets of the Sophocles Company. In addition, Pandora agreed to pay the owners of

Sophocles an additional $$200,000$ if a specific contract achieved the profit levels that were

targeted by the owners of Sophocles in their sale agreement over two years. The fair value of this

amount, with an agreed likelihood of occurrence and discounted to present value, is $$160,000.$ In

addition, Pandora paid $$10,000$ in stock issue costs, $$40,000$ in legal fees, and $$48,000$ to

employees who were dedicated to this acquisition for the last three months of the year.

Summarized balance sheet and fair value information for Sophocles immediately prior to the

acquisition follows.

REQUIRED:

A$.$ Prepare Pandora's general journal entry for the acquisition of Sophocles assuming that

Pandora's stock was trading at $$35$ at the date of acquisition and Sophocles dissolves as a

separate legal entity.

B$.$ At December $31,2018,$ the fair value of additional payment is calculated to be $$150,000.$

Prepare Pandora's general journal entry for the contingent consideration.

C$.$ At December $31,2019,$ target profit levels are achieved, and Pandora pays $$200,000.$ Prepare

Pandora's general journal entry for the payment.