On June 30, 2011, Sampras Company reported the following account balances:

Receivables	$80,000
Inventory	70,000
Buildings (net)	75,000
Equipment (net)	25,000
Total assets	$250,000
Current liabilities	($10,000)
Long-term liabilities	50,000
Common stock	90,000
Retained earnings	100,000
Total liabilities and equities	($250,000)

On June 30, 2011, Pelham paid $300,000 cash for all assets and liabilities of Sampras, which will cease to exist as a separate entity. In connection with the acquisition, Pelham paid $10,000 in legal fees. Pelham also agreed to pay $50,000 to the former owners of Sampras contingent on meeting certain revenue goals during 2012. Pelham estimated the present value of its probability adjusted expected payment for the contingency at $15,000. In determining its offer, Pelham noted the following pertaining to Sampras:

• It holds a building with a fair value $40,000 more than its book value.

• It has developed a customer list appraised at $22,000, although it is not recorded in its financial records.

• It has research and development activity in process with an appraised fair value of $30,000.

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 Pelham’s accounting entry to record the combination with Sampras using the

a. Acquisition method.

b. Purchase method.