On June 30, 2015, Streeter Company reported the following account balances:
Receivables $ 83,900 Current liabilities $ (12,900 )
Inventory 70,250 Long-term liabilities (54,250 )
Buildings (net) 78,900 Common stock (90,000 )
Equipment (net) 24,100 Retained earnings (100,000 )
Total assets $ 257,150 Total liabilities and equities $ (257,150 )
On June 30, 2015, Princeton paid $310,800 cash for all assets and liabilities of Streeter, which will cease to exist as a separate entity. In connection with the acquisition, Princeton paid $15,100 in legal fees. Princeton also agreed to pay $55,600 to the former owners of Streeter contingent on meeting certain revenue goals during 2016. Princeton estimated the present value of its probability adjusted expected payment for the contingency at $17,900.
In determining its offer, Princeton noted the following pertaining to Streeter:
• It holds a building with a fair value $43,100 more than its book value.
• It has developed a customer list appraised at $25,200, although it is not recorded in its financial records.
• It has research and development activity in process with an appraised fair value of $36,400. However, the project has not yet reached technological feasibility and the assets used in the activity have no alternative future use.
• Book values for the receivables, inventory, equipment, and liabilities approximate fair values.
Prepare Princeton's accounting entry to record the combination with Streeter.
Prepare the following journal entries:
Record the acquisition of Streeter company.
Record the legal fees related to the combination.