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Gull Company purchased the net assets of the Hart Company on January 1, 2011, and made the following entry to record the purchase:

Gull Company purchased the net assets of the Hart Company on January 1, 2011, and made the following entry to record the purchase:

Current Assets $100,000
Equipment $150,000
Land $50,000
Buildings $300,000
Goodwill $100,000
Liabilities $80,000
Common Stock ($1 par) $100,000 Paid-In Capital in Excess of Par $520,000

Make the required entry on January 1, 2013, for each of the following independent contingency agreements:

1. An additional cash payment will be made on January 1, 2013, equal to twice the amount by which the average annual earnings of the Hart Division exceed $25,000 per year, prior to January 1, 2013. Net Income was $50,000 in 2011 and $60,000 in 2012. Assume that the liabilities recorded on January 1, 2011, included an estimated contingent liability recorded at an estimated amount of $40,000.
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Accounting -8087743.xls

Calculation of cash payment for additional liabilities
Particulars
Net Income for 2011
Net Income for 2012
Average Income
Excess paid over the average income 25000 per year
Total
Total amount paid...

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