• Question 1 On January 2, 2016, Pam Corporation issues its own $10 par common stock for all the outstanding stock of Sun Corporation in an acquisition. Sun is dissolved. In addition, Pam pays $40,000 for registering and issuing securities and $60,000 for other costs of combination. The market price of Pam’s stock on January 2, 2016, is $60 per share. Relevant balance sheet information for Pam and Sun Corporations on December 31, 2015, just before the combination, is as follows (in thousands): Item Pam Historical cost Sun Historical cost Sun Fair Value Cash $240 $20 $20 Inventories 100 60 120 Other current assets 200 180 200 Land 160 40 200 Plant and Equipment-net 1,300 400 700 Total assets $2,000 $700 $1,240 Liabilities $400 $100 $100 Capital stock, $ 10 par 1,000 200 Additional paid - in capital 400 100 Retained earnings 200 300 Total Liabilities and Owners’ equity $2,000 $700 Required: Assume that Pam issues 25,000 shares of its stock for all of Sun’s outstanding shares. i. Prepare journal entries to record the acquisition of Sun ( 3 pts) ii. Prepare a balance sheet for Pam Corporation immediately after the acquisition ( 3 pts) pts) Assume that Pam issues 15,000 shares of its stock for all of Sun’s outstanding shares. i. Prepare journal entries to record the acquisition of Sun ( 3 pts) Prepare a balance sheet for Pam Corporation immediately after the acquisition ( 3 pts) Question 2 Assume Pop Corporation acquired 100 percent of Son Corporation’s outstanding voting common stock on January 1, 2016, for $660,000 cash. Son’s stockholders’ equity on this date consisted of $300,000 capital stock and $300,000 retained earnings. Pop made sales of $100,000 to Son at a gross profit of $40,000 during 2016; during 2017, Pop made sales of $120,000 to Son at a gross profit of $48,000. One-half the 2016 sales were inventoried by Son at year-end 2016, and one-fourth the 2017 sales were inventoried by Son at year-end 2017. Son owed Pop $17,000 on account at December 31, 2017. Required Record the necessary journal entries ( 5 pts) Compute and record deferred Gross profit in 2016 ( 5 pts)