The condensed balance sheets as of December 31 for Rice and Associates and Rachel Excavation are provided below. Rice Rachel Assets Cash Accounts receivable Inventory Fixed assets Total assets $ 196,000 $ 10,000 150,000 40,000 300,000 40,000 400,000 130,000 $1,046,000 $220,000 Liabilities and Stockholders’ Equity Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings Total liabilities and stockholders’ equity $ 80,000 $ 20,000 300,000 50,000 400,000 90,000 140,000 10,000 126,000 50,000 $1,046,000 $220,000 As of December 31, the market values of Rachel’s inventories and fixed assets were $70,000 and $120,000, respectively. Liabilities are at FMV on the balance sheet. On December 31 Rice and Associates purchased Rachel Excavation for $180,000 cash. The preceding balance sheets were prepared immediately prior to the acquisition. REQUIRED:

a. Prepare the journal entry recorded by R.ice to recognize the acquisition.

b. Prepare a consolidated work sheet and a consolidated balance sheet.