Potluck Corp. acquired all of the stock of Sauers Corp. on June 30, 2022, in an acquisition reported as a stock acquisition. Sauers trial balance at the date of acquisition, along with the fair values of its assets and liabilities, are:

	Book Value Dr (Cr)	Fair Value Dr (Cr)
Tangible assets	$78,000,000	$32,500,000
Intangible assets	19,500,000	117,000,000
Liabilities	(72,800,000)	(71,500,000)
Capital stock	(13,000,000)
Retained earnings	(11,570,000)
Accumulated other comprehensive income	(130,000)
Total	$0

Potluck pays $117 million in cash and issues 1,950,000 shares of stock to the former owners of Sauers. Potlucks stock has a par value of $0.01 /share. The market price of the shares at the date of acquisition, $46 /share, is used to value the shares issued. Registration fees for the stock are $650,000 and legal and consulting fees connected with the acquisition are $780,000, both paid in cash.

Required

Note: Enter all zeros with your numerical answers, do not abbreviate your answers in thousands or in millions.

a. Prepare the journal entry Potluck made to record the stock acquisition on its own books on June 30, 2022.

		Debit	Credit
	Additional Paid-in CapitalAOCICashCommon stockGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICashCommon stockGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICashCommon stockGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICashCommon stockGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICashCommon stockGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	To record the acquisition

b. Prepare working paper eliminating entries (E) and (R) to combine the accounts of Potluck and Sauers at June 30, 2022.

		Debit	Credit
(E)	Additional Paid-in CapitalAOCICapital stockCashGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICapital stockCashGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICapital stockCashGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICapital stockCashGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	To eliminate Sauer's equity accounts against the investment account
(R)	Additional Paid-in CapitalAOCICapital stockCashGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICapital stockCashGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICapital stockCashGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICapital stockCashGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	Additional Paid-in CapitalAOCICapital stockCashGoodwillIntangible assetsInvestment in Sauers Corp.LiabilitiesMerger expensesRetained earningsTangible assets		Answer
	To revalue Sauer's assets and liabilities to fair value