Peep Inc. incurred the following direct costs:Peep Inc. acquired 100% of the outstanding common stock of Shy Inc. for $2,500,000 cash and 15,000 shares of its common stock ($2 par value). The stocks market value was $40 on the acquisition date.

Accounting fees for the purchase $15,000

Legal fees for registering the common stock 30,000

Other legal fees for the acquisition 45,000

Travel expenses to meet with Shy managers 5,000

SEC filing fees 2,000

$97,000

Before the acquisition consummation date, $90,000 of the direct costs was charged to a deferred charges account pending the completion of the acquisition. The remaining $7,000 has not been accrued or paid.

Required:

Prepare the journal entry to record both the acquisition and the direct costs.