Paxco Acquired 100% of Saxco's Outstanding Common Stock by Issuing

Essay

Paxco acquired 100% of Saxco's outstanding common stock by issuing 80,000 shares of its $10 par common stock (which was being traded at $100 per share on the date of acquisition). Paxco incurred the following additional costs:
Assume that Paxco debited an account called Deferred Charges when it paid for the above $400,000 of costs. If Saxco's cumulative earnings for the next three years exceed $3,000,000, Paxco must pay $500,000 cash to Saxco's former shareholders.
Required (read all three before proceeding):
a. Prepare the journal entry as of the acquisition date to record the issuance of the common stock. (Exclude that portion of the entry relating to the $400,000 of additional costs.)
b. Prepare the journal entry as of the acquisition date relating only to the $400,000 of additional costs incurred.
c. Prepare the journal entry as of the acquisition date pertaining to the contingent consideration.