Jersey Corporation acquired 100 percent of Lime Company on January 1, 20X7, for $203,000. The trial balances for the two companies on December 31, 20X7, included the following amounts:

Additional Information
1. On January 1, 20X7, Lime reported net assets with a book value of $150,000. A total of $20,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7.
2. Lime’s depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment.
3. Jersey used the equity method in accounting for its investment in Lime.
4. Detailed analysis of receivables and payables showed that Lime owed Jersey $16,000 on December 31, 20X7.

Required
a. Give all journal entries recorded by Jersey with regard to its investment in Lime during 20X7.
b. Give all elimination entries needed to prepare a full set of consolidated financial statements for 20X7.
c. Prepare a three-part consolidation worksheet as of December 31,20X7.

Transcribed Image Text:

Jersey Corporation Lime Company Credit Credit Accounts Receivable Buildings & Equipment Investment in Lime Company Stock Cost of Goods Sold 7 5 Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable 5 0 Retained Earnings Income from Subsidiary $1,772,000 $1,772,000 $710,000 $710,000