2. During the current year, Broncos Company acquired all of the outstanding common stock of Denver Inc. paying $12,000,000 cash. The book values and fair values of Denver's assets and liabilities acquired are listed below:

	Book Value	Fair Value
Accounts receivable	$1,800,000	$ 1,625,000
Inventories	2,700,000	4,000,000
Property, plant, and equipment	9,000,000	11,625,000
Accounts payable	3,000,000	3,000,000
Bonds payable	4,500,000	4,125,000

Prepare the journal entry to record the acquisition by Broncos Company.

3. Muller Corp. pays its employees monthly. The payroll information listed below is for January 2022, the first month of Muller's fiscal year.

Salaries $400,000

Federal income taxes to be withheld 80,000

Federal unemployment tax 3,200

State unemployment tax 21,600

Social Security tax rate 6.2%

Medicare tax rate 1.45%

Prepare the appropriate journal entries to record salaries and wages expense and payroll tax expense for the January 2022 pay period.

4. In 2022, Metro Inc. introduced a new line of televisions that carry a two-year warranty against manufacturer's defects. Based on past experience with similar products, warranty costs are expected to be approximately 1% of sales during the first year of the warranty and approximately an additional 3% of sales during the second year of the warranty. Sales were $6,000,000 for the first year of the product's life and actual warranty expenditures were $29,000. Assume that all sales are on credit.

1. Prepare journal entries to summarize the sales and any aspects of the warranty for 2022.

2. What amount should Metro report as a liability at December 31, 2022? Show your computation.