On May 1, Soriano Company reported the following account balances along with their estimated fair values:

Items	Carrying Amount	Fair Value
Receivables	$ 143,600	$ 143,600
Inventory	76,400	76,400
Copyrights	136,000	577,000
Patented technology	913,000	753,000
Total assets	$ 1,269,000	$ 1,550,000
Current liabilities	$ 197,000	$ 197,000
Long-term liabilities	676,000	658,300
Common stock	100,000	0
Retained earnings	296,000	0
Total liabilities and equities	$ 1,269,000	0

On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $141,000 to an investment banking firm.

The following information was also available:

• Zambrano further agreed to pay an extra $85,000 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $42,500.
• Soriano has a research and development project in process with an appraised value of $244,000. However, the project has not yet reached technological feasibility, and the projects assets have no alternative future use.

Required:

a. and b. Prepare Zambranos journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $872,800 and (b) $982,000.

1. Record the acquisition of Soriano Company. Assume its initial cash payment to the former owners was $872,800.
2. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $872,800.
3. Record the acquisition of Soriano Company. Assume its initial cash payment to the former owners was $982,000.
4. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $982,000.