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:

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

b. Prepare the journal entry on Peoria Corporations books to record the acquisition of Sands Corporations net assets: c. Prepare the journal entry on Peoria Corporations books to record the direct combination costs:

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

Continuing with the fact pattern from Problem III, over the next three (3) calendar years, Sub Corporation had the following activity at December 31 of each indicated year:

1. Using a T-account, record and label all of the transactions affecting the Investment in Sub Corp. since the January 1, 2016 acquisition through December 31, 2018 and total the balance at the end of 2018:

2. Using a T-account, record and label all of the transactions affecting the Equity in Subsidiary Earnings during 2018:

The financial statements of Parents Corp. and Sub Corp. are provided below (pre-consolidation) at December 31, 2018:

Note: Various accounts and totals above were intentionally left blank.

3. Without using a worksheet, using the information on the pre-consolidation financial statements on the previous page, prepare Consolidation Worksheet entries S, A, I, D, and E at 12/31/18 in the proper order; show any calculations in good form:

S

A

I

D

E Note: Amortization of the Note should recorded as Interest Expense.

4. Selected accounts from the financial statements are presented below with worksheet columns provided. Using the Consolidation Worksheet entries prepared in Question 3, prepare the consolidated totals that would appear on the consolidated financial statements at 12/31/18:

Peoria's Sand's Sand's Book Values Book Values Fair Value's Cash Short-term Investments Accounts Receivabk (net) Inventory Other Current Asscts Property, Plnt &Equipment (net) Patent (net) Computerized Software (net) S1,800,000 S322,000S322,000 68,234 240,000 320,000 28,466 1,600,000 700,000 462,000 $15,105,970S 2,894,700$ 4,740,700 68,234 298,000 362,000 28,466 1,056,000 660,000 00,000 692,450 1,360,000 1,530,000 6,170,000 2,120,000 Total Assets S (960,000 S (180,000 (180,000) (700,000) Liabilities (current) Liabilities (non-current) Common stock-P (S 100 par) Common stock-S (S 10 par) Additional Paid-in Capital Retained Earnings (1-1-16) (4,850,000) (680,000) (400,000) (6,095,300) Total Liabilitics + Sh. Equity $ (15,105,970)S (2,894,700) Peoria's Sand's Sand's Book Values Book Values Fair Value's Cash Short-term Investments Accounts Receivabk (net) Inventory Other Current Asscts Property, Plnt &Equipment (net) Patent (net) Computerized Software (net) S1,800,000 S322,000S322,000 68,234 240,000 320,000 28,466 1,600,000 700,000 462,000 $15,105,970S 2,894,700$ 4,740,700 68,234 298,000 362,000 28,466 1,056,000 660,000 00,000 692,450 1,360,000 1,530,000 6,170,000 2,120,000 Total Assets S (960,000 S (180,000 (180,000) (700,000) Liabilities (current) Liabilities (non-current) Common stock-P (S 100 par) Common stock-S (S 10 par) Additional Paid-in Capital Retained Earnings (1-1-16) (4,850,000) (680,000) (400,000) (6,095,300) Total Liabilitics + Sh. Equity $ (15,105,970)S (2,894,700)