Holmes Inc. acquired 100% of the voting common stock of Lynch Inc. on December 31, 2020 . The book value and fair value of Lynch's accounts on that date are following. Credit balances are indicated by parentheses. Lynch remains as a separate legal entity after acquisition. Assume that Holmes issued 40,000 shares of common stock with a $5 par value and a $25 fair value for all of the outstanding stock of Lynch. In addition, Holmes agreed to pay the shareholders of Lynch another $80,000 if Lynch's earnings exceed $50,000 next year. The estimated probability of this payment is 80% and we assume a present value factor of 0.95 for one year. Holmes also paid $8,000 legal fees and $3,000 stock issuance fees for this acquisition. Prepare the journal entries Holmes records on the acquisition date December 31, 2020