The Prince company acquired 100% of the voting stock of the Queen Company on January 1, 2017 for the following consideration.

• $1,200,000 market value of 10,000 shares of its $10 par value common stock
• $2,000,000 note payable due in 5 years.
• A contingent payment of $200,000 cash if queen generates profits of $500,000 or more in 2016 (fair value = 57,000)

Queens profits for 2017 totaled $600,000

A. Record the initial entry for the acquisition of Queen:

Answer part A here

B. B. Record the transaction and adjustment needed on January 1, 2018 based upon Queens 2017 results:

Answer part B here

Explain how you got both answers