On December 31, Pacifica, Incorporated, acquired 100 percent of the voting stock of Seguros Company. Pacifica will maintain Seguros as a wholly owned subsidiary with its own legal and accounting identity. The consideration transferred to the owner of Seguros included 57,140 newly issued Pacifica common shares ($20 market value, $5 par value) and an agreement to pay an additional $130,000 cash if Seguros meets certain project completion goals by December 31 of the following year. Pacifica estimates a 50 percent probability that Seguros will be successful in meeting these goals and uses a 4 percent discount rate to represent the time value of money.

Immediately prior to the acquisition, the following data for both firms were available:

Items	Pacifica	Seguros Book Values	Seguros Fair Values
Revenues	$ (1,350,000)	0	0
Expenses	945,000	0	0
Net income	$ (405,000)	0	0
Retained earnings, 1/1	$ (988,000)	0	0
Net income	(405,000)	0	0
Dividends declared	95,000	0	0
Retained earnings, 12/31	$ (1,298,000)	0	0
Cash	$ 129,000	$ 153,000	$ 153,000
Receivables and inventory	199,000	152,000	132,500
Property, plant, and equipment	2,030,000	468,000	632,500
Trademarks	336,000	174,000	223,800
Total assets	$ 2,694,000	$ 947,000	0
Liabilities	$ (521,000)	(190,000)	$ (190,000)
Common stock	(400,000)	(200,000)	0
Additional paid-in capital	(475,000)	(70,000)	0
Retained earnings	(1,298,000)	(487,000)	0
Total liabilities and equities	$ (2,694,000)	$ (947,000)	0

In addition, Pacifica assessed a research and development project under way at Seguros to have a fair value of $136,000. Although not yet recorded on its books, Pacifica paid legal fees of $17,800 in connection with the acquisition and $8,200 in stock issue costs.

Required:

a. Prepare Pacificas journal entries to record the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs.

b. and c. Present a worksheet showing the postacquisition column of accounts for Pacifica and the consolidated balance sheet as of the acquisition date.

PACIFICA, INCORPORATED AND SEGUROS COMPANY Consolidation Worksheet For Year Ending December 31 \begin{tabular}{|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Accounts } & \multirow[b]{2}{*}{ Pacifica } & \multirow[b]{2}{*}{ Seguros } & \multicolumn{2}{|c|}{ Consolidation Entries } & \multirow{2}{*}{ConsolidatedTotals} \\ \hline & & & Debit & Credit & \\ \hline \multicolumn{6}{|l|}{ Revenues } \\ \hline \multicolumn{6}{|l|}{ Expenses } \\ \hline \multicolumn{6}{|l|}{ Net income } \\ \hline \multicolumn{6}{|l|}{ Retained earnings, 1/1} \\ \hline \multicolumn{6}{|l|}{ Net income } \\ \hline \multicolumn{6}{|l|}{ Dividends declared } \\ \hline \multicolumn{6}{|l|}{ Retained earnings, 12/31} \\ \hline \multicolumn{6}{|l|}{ Cash } \\ \hline \multicolumn{6}{|l|}{ Receivables and inventory } \\ \hline \multicolumn{6}{|l|}{ Property, plant and equipment } \\ \hline \multicolumn{6}{|l|}{ Investment in Seguros } \\ \hline \multicolumn{6}{|c|}{ Research and development asset } \\ \hline \multicolumn{6}{|l|}{ Goodwill } \\ \hline \multicolumn{6}{|l|}{ Trademarks } \\ \hline Total assets & $ & $ & & & $ \\ \hline \multicolumn{6}{|l|}{ Liabilities } \\ \hline \multicolumn{6}{|c|}{ Contingent performance obligation } \\ \hline \multicolumn{6}{|l|}{ Common stock } \\ \hline \multicolumn{6}{|l|}{ Additional paid-in capital } \\ \hline \multicolumn{6}{|l|}{ Retained earnings } \\ \hline Total liabilities and equities & $ & $ & $ & $ & $ \\ \hline \end{tabular} PACIFICA, INCORPORATED AND SEGUROS COMPANY Consolidation Worksheet For Year Ending December 31 \begin{tabular}{|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Accounts } & \multirow[b]{2}{*}{ Pacifica } & \multirow[b]{2}{*}{ Seguros } & \multicolumn{2}{|c|}{ Consolidation Entries } & \multirow{2}{*}{ConsolidatedTotals} \\ \hline & & & Debit & Credit & \\ \hline \multicolumn{6}{|l|}{ Revenues } \\ \hline \multicolumn{6}{|l|}{ Expenses } \\ \hline \multicolumn{6}{|l|}{ Net income } \\ \hline \multicolumn{6}{|l|}{ Retained earnings, 1/1} \\ \hline \multicolumn{6}{|l|}{ Net income } \\ \hline \multicolumn{6}{|l|}{ Dividends declared } \\ \hline \multicolumn{6}{|l|}{ Retained earnings, 12/31} \\ \hline \multicolumn{6}{|l|}{ Cash } \\ \hline \multicolumn{6}{|l|}{ Receivables and inventory } \\ \hline \multicolumn{6}{|l|}{ Property, plant and equipment } \\ \hline \multicolumn{6}{|l|}{ Investment in Seguros } \\ \hline \multicolumn{6}{|c|}{ Research and development asset } \\ \hline \multicolumn{6}{|l|}{ Goodwill } \\ \hline \multicolumn{6}{|l|}{ Trademarks } \\ \hline Total assets & $ & $ & & & $ \\ \hline \multicolumn{6}{|l|}{ Liabilities } \\ \hline \multicolumn{6}{|c|}{ Contingent performance obligation } \\ \hline \multicolumn{6}{|l|}{ Common stock } \\ \hline \multicolumn{6}{|l|}{ Additional paid-in capital } \\ \hline \multicolumn{6}{|l|}{ Retained earnings } \\ \hline Total liabilities and equities & $ & $ & $ & $ & $ \\ \hline \end{tabular}