A summary of the assets and equities of Pot Corporation and its 80 percent-owned subsidiary, Sea Corporation, at December 31, 2016, is given as follows (in thousands):

On January 2, 2017, Sea acquired a 70 percent interest in Toy Corporation for $588,000. Toy's net assets of $800,000 were recorded at fair values on this date. The equity of Toy on December 31, 2016, consisted of $600,000 capital stock and $200,000 retained earnings. Data on operations of the affiliates for 2017 are as follows (in thousands):

Pot Corporation's $40,000 unrealized profit resulted from the sale of land to Toy. Toy's unrealized profit is from sales of merchandise items to Sea and is included in Sea's inventory at December 31, 2017.
REQUIRED
1. Prepare all journal entries required on the books of Pot and Sea to account for their investments for 2017 on an equity basis. The excess of fair value over book value is goodwill.
2. Compute the net incomes of Pot and Sea, and total noncontrolling interest share for 2017.
3. Prepare a schedule showing the assets and equities of Pot, Sea, and Toy on December 31, 2017, assuming liabilities of $600,000, $400,000, and $200,000 for Pot, Sea, and Toy, respectively.

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Pot $3,200 $4,000 Sea Assets Investment in Sea (80%) $1,400 800 Total assets $1,400 Liabilities Capital stock Retained earnings S 600 2,400 1,000 $4,000 $ 400 800 200 $1,400 Total equities Separate Earnings $600 200 120 Dividends $200 120 40 Unrealized Profit Included in Separate Earnings $40 Pot Sea Toy