The balance sheets of Petrello Company and Sanchez Company as of January 1, 2014, are presented below. On that date, afer an extended period of negotiation, the two companies agreed to merge. To effect the merger, Petrello Company is to exchange its unissued common stock for all the outstanding shares of Sanchez Company in the ratio of share of Petrello for each share of Sanchez. Market values of the shares were agreed on as Petrello, $48 and Sanchez $24. The fair values of Sanchez Company?s assets and liabilities are equal to their book values with the exception of plant and equipment, which has an estimated fair values of $720,000.

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2.2. The balance sheets of Petrello Company and Sanchez Company as of January 1, 2014, are presented below. On that date, afer an extended period of negotiation, the two companies agreed to merge. To effect the merger, Petrello Company is to exchange its unissued common stock for all the outstanding shares of Sanchez Company in the ratio of share of Petrello for each share of Sanchez. Market values of the shares were agreed on as Petrello, $48 and Sanchez $24. The fair values of Sanchez Company's assets and liabilities are equal to their book values with the exception of plant and equipment, which has an estimated fair values of $720,000. Pretello Sanchez Cash $ 480,000 $ 200,000 Receivables 480,000 240,000 Inventories 2,000,000 240,000 Plant and equipment (net) 3,840,000 800,000 Total assets 6,800,000 1,480,000 Liabilities 1,200,000 320,000 Common stock ($16 par value) 3,440,000 800,000 Other contributed capital 400,000 0 Retained earnings 1,760,000 360,000 Total equities 6,800,000 1,480,000 Required: A. Prepare journal entries in Pretello book to record the aquisition. B. Prepare a balance sheet for Pretello Company immediately after the merger. 2.4. P Company Acquired the assets and assumed the liabilities of S Company on January 1, 2014, for $510,000 when S Company's balance sheet was as follows: Cash Receivables Inventory Land Plant and Equipments (net) Total $ 96,000 55,200 110,400 169,200 466,800 $ 897,600 Account Payable Bonds Payable, 10% Due 12/31/2019 Common Stock, $2 par v. Retained Earnings Total $ 44,400 480,000 120.000 253,200 $ 897,600 Fair value of S Company's assets and liabilities were equal to their book values except for the following: 1. Inventory has a fair value of $126,000 2. Land has a fair value of $198,000 3. The bonds pay interest semiannually on June 30 and December 31. The current yield rate on bonds of similar risk is 8% Required:Prepare journal entry on P Company's books to record the acquisition of the assets and assumption of the liabilities of S Company. 2.5. Pritano Company acquired all the net assets of Succo Company on December 31, 2014, for $2,160,000 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Current assets Plant and equipment Total Liabilities Common Stock Other contributed capital Retained Earnings Total Book Value Fair Value $ $ 960,000 960,000 1,080,000 1,440,000 $ $ 2,400,000 2,040,000 180,000 $ 216,000 480,000 600,000 780,000 $ 2,040,000 As part of the negotiations, Pritano agreed to pay the stockholders of Succo $360,000 cash if the postcombination earnings of Pritano averaged $2,160,000 or more per year over the next two years. Required: Prepare the journal entries on the books of Pritano to record the acquisition on December 31, 2014. It is expected that the earnings target is likely to be met