PROBLEM 4 Gull Company purchased the net assets of Hart Company on January 1, 20X1, and made the following entry to record the purchase: Current Assets.... Equipment. Land. Buildings...... Goodwill.. Liabilities.... Common Stock (54 par). Paid-In Capital in Excess of Par.... 100,000 150,000 50,000 300,000 100,000 80,000 100,000 520,000 Make the required entry on the given dates, for each of the following independent contingency agreements: 1. An additional cash payment would be made on January 1, 20X4, equal to thrice the amount by which average annual earnings of the Hart Division exceed $32,000 per year, prior to January 1, 20X3. Net income was $69,000 in 20X1, $81,000 in 20X2 and $96,000 in 20X3. Assume that the liabilities recorded on January 1, 20X1, include an estimated contingent liability recorded at an estimated amount $40,000. 2. Added shares would be issued on January 1, 20X3, equal in value to twice the amount by which average annual earnings of the Hart Division exceed $25,000 per year, prior to January 1, 20X3. Net income was $70,000 in 20X1 and $76,000 in 20X2. The market price of the shares on January 1, 20X3, was $6. 3. Added shares would be issued on January 1, 20X3, to compensate for any fall in the value of Gull common stock below $10 per share. The settlement would be to cure the deficiency by issuing added shares based on their fair value on January 1, 20X3. The market price of the shares on January 1, 20X3, was $8