2 Penn Company acquired all of Southern, Inc.'s outstanding shares on December 31, 2018, for $1,089,000 cash. Penn will operate Southern as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Southern's book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Southern has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Penn assessed Southern's fair and book value differences as follows: Computer software Equipment Client contracts In-process research and development Notes payable Book Values $44,000 88,000 -0- Fair Values $154,000 66,000 220,000 -0- 88,000 (132,000) (143,000) At December 31, 2018, the following financial information is available for consolidation: Cash Receivables Inventory Penn $79,200 255,200 308,000 Southern $39,600 111,100 198,000 Investment in Spider 1,089,000 -0- Computer software 462,000 44,000 Buildings (net) 1,309,000 286,000 Equipment (net). 677,600 88,000 Client contracts -0- -0- Goodwill -0- -0- Total assets $4,180,000 $770,000 Accounts payable $(193,600) $(55,000) Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities Penn (1,122,000) Southern (132,000) (836,000) (374,000) (1,654,400) $(4,180,000) (220,000) (55,000) (308,000) $(770,000) Prepare a consolidated balance sheet for Penn and Southern as of December 31, 2018