The July 31, Year 3, balance sheets of two companies that are parties to a business combination are as follows: Red Corp. Carrying Amount Current assets $1,720,000 Property, plant and equipment (net) 1,224,000 Sax Inc. Carrying Amount $ 432,000 852,000 Fair Value $480,000 984,000 Patents 84,000 $2,944,000 $1,284,000 Current liabilities $1,480,000 $ 264,000 264,000 Long-term debt 492,000 372,000 396,000 Common shares 840,000 180,000 Retained earnings 132,000 $2,944,000 468,000 $1,284,000 In addition to the property, plant and equipment identified above, Red Corp. attributed a value of $112,000 to Sax's assembled workforce. They have the knowledge and skill to operate Sax's manufacturing facility and are essential to the success of the operation. Although the eight manufacturing employees are not under any employment contracts, management of Red was willing to pay $112,000 as part of the purchase price on the belief that most or all of these employees would continue to work for the company. Effective on August 1, Year 3, the shareholders of Sax accepted an offer from Red Corporation to purchase all of their common shares. Red's costs for investigating and drawing up the share purchase agreement amounted to $20,000. Required: (a) Assume that Red made a $944,000 cash payment to the shareholders of Sax for 100% of their shares. (i) Prepare the journal entry in the records of Red to record the share acquisition. (If no entry is required for a transaction/event. select "No Journal Entry Required" in the first account field.) View transaction list