Serano Corporation's Trial Balance Is as Follows An Analysis of Serano's Assets and Liabilities Reveals That Its

Serano Corporation's trial balance is as follows:
$$\begin{array} { | l | c | } \hline & \begin{array} { c } \text { Serano } \\\text { Dr (Cr) }\end{array} \\\hline \text { Cash and receivables } & \$ 200 \\\hline \text { Inventories } & 600 \\\hline \text { Property, plant, and equipment, net } & 7,500 \\\hline \text { Liabilities } & ( 7,600 ) \\\hline \text { Capital stock } & ( 720 ) \\\hline \text { Retained deficit } & \underline { 20 } \\\hline & \underline { \underline { \$ \quad 0 } } \\\hline\end{array}$$ An analysis of Serano's assets and liabilities reveals that its inventories are overvalued by $100 and its property, plant and equipment is overvalued by $3,000. In addition, the following items are not currently reported on Serano's balance sheet:
•Customer contracts, valued at $30
•In-process research and development, valued at $200
•Expected future warranty liabilities with a present value of $15
Pago issues new stock with a market value of $700 to acquire the assets and liabilities of Serano. Stock registration fees are $50, paid in cash. Consulting, accounting, and legal fees connected with the merger are $100, paid in cash. In addition, Pago enters into an earnings contingency agreement, whereby Pago will pay the former shareholders of Serano an additional amount if Serano's performance meets certain minimum levels. The present value of the contingency is estimated at $25.
Required a. Prepare the journal entry or entries Pago makes to record the acquisition.
b. Prepare consolidation eliminating entries (E) and (R) necessary to consolidate the trial balances of Pago and Serano at the date of acquisition