Pocket Corporation acquired 100 percent of Strap Corporation’s common stock on December 31, 20X2. Balance sheet data for the two companies immediately following the acquisition follow:

At the date of the business combination, the book values of Strap’s net assets and liabilities approximated fair value except for inventory, which had a fair value of $85,000, and land, which had a fair value of $45,000.

Required

For each question, indicate the appropriate total that should appear in the consolidated balance sheet prepared immediately after the business combination.

1. What amount of inventory will be reported?a. $70,000b. $130,000c. $200,000d. $215,000

2. What amount of goodwill will be reported?a. $0b. $23,000c. $43,000d. $58,000

3. What amount of total assets will be reported?a. $84,400b. $1,051,000c. $1,109,000d. $1,249,000

4. What amount of total liabilities will be reported?a. $265,000b. $436,500c. $701,500d. $1,249,000

5. What amount of consolidated retained earnings will be reported?a. $547,500b. $397,500c. $347,500d. $257,500

6. What amount of total stockholders’ equity will be reported?a. $407,500b. $547,500c. $844,000d. $1,249,000

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Item Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Strap Corporation Stock Total Assets Accounts Payable Taxes Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Pocket Corporation $ 49,000 110,000 130,000 80,000 500,000 (223,000) 198,000 $844,000 $ 61,500 95,000 280,000 150,000 257,500 $844,000 Strap Corporation $ 30,000 45,000 70,000 25,000 400,000 (165,000) $405,000 $ 28,000 37,000 200,000 50,000 90,000 $405,000