On January 1, 2016, Peoria Corporation acquired 100% of Sands Corporation for $2,220,000 by paying $600,000 in cash and issuing 9,000 shares of Peoria common stock (fair value $180). In this problem, Sands will dissolve as a separate entity once Peoria journalizes the acquisition. In addition to the acquisition costs, Peoria paid $86,000 in direct combination costs and $48,000 in stock issue costs. Exhibit 1-1 below reveals the various book and fair values of the respective entities as of January 1, 2016:

Exhibit 1-1

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Sand's Book Values 1/1/16

$ 322,000

68,234

298,000

362,000

28,466

1,056,000

660,000

100,000

$ 2,894,700

Sand's Fair Value's 1/1/16

$ 322,000

68,234

240,000

320,000

28,466

1,600,000

700,000

1,462,000

$ 4,740,700

Cash

Short-term Investments

Accounts Receivable (net)

Inventory

Other Current Assets

Property, Plant & Equipment (net)

Patent (net)

Computerized Software (net)

Peoria's Book Values 1/1/16

$ 1,800,000

692,450

1,360,000

1,530,000

485,300

6,170,000

2,120,000

$ 15,105,970

948,220

Total Assets

Total Liabilities + Sh. Equity

Liabilities (current)

Liabilities (non-current)

Common stock-P ($ 100 par)

Common stock-S ($ 10 par)

Additional Paid-in Capital

Retained Earnings (1-1-16)

$ (960,000)

(4,850,000)

(2,000,000)

(6,095,300)

(1,200,670)

$ (15,105,970)

$ (180,000)

(680,000)

(400,000)

(1,410,000)

(224,700)

$ (2,894,700)

$ (180,000)

(700,000)

1. Prepare the allocation of the acquisition of Sands Corporation; show all of your calculations in good form:

2. Prepare the journal entry on Peoria Corporations books to record the acquisition of Sands Corporations net assets:

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3. Prepare the journal entry on Peoria Corporations books to record the direct combination costs:

4. Prepare the journal entry on Peoria Corporations books to record the stock issue costs: