On December 31, 2013, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the outstanding shares 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. The fair value of this amount, with an agreed likelihood of occurrence and discounted to present value, is $160,000 (Contingent Liability). 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.

Book Value Fair Value

Cash $100,000 $100,000

Accounts Receivable 280,000 250,000

Inventory 520,000 640,000

Buildings and Equipment (net) 750,000 870,000

Trademarks and Tradenames 0 500,000

Total Assets $1,650,000

Accounts Payable $200,000 $190,000

Notes Payable 900,000 900,000

Retained Earnings 550,000

Total Liabilities and Equity $1,650,000

Required:

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.