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On December 31, 20X7, Prime Company recorded the following entry

On December 31, 20X7, Prime Company recorded the following entry on its books to adjust its investment

Question:

On December 31, 20X7, Prime Company recorded the following entry on its books to adjust its investment in Lane Company from the fully adjusted equity method to the modified equity method:

Required
a. Adjust the data reported by Prime in the trial balance in Problem P7-33 for the effects of the adjusting entry presented above.
b. Prepare the journal entries that would have been recorded on Prime's books during 20X7 if it had always used the modified equity method.
c. Prepare all elimination entries needed to complete a consolidation worksheet as of December 31, 20X7, assuming Prime has used the modified equity method.
d. Complete a three-part consolidation worksheet as of December 31,20X7.

Transcribed Image Text:

Income from Lane Company Investment in Lane Company Stock 2,000 38,400 Retained Earnings 40,400

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a Adjusted trial balance Prime Company Lane Company Item Debit Credit Debit Credit Cash and Accounts Receivable 151000 55000 Inventory 240000 100000 Land 100000 80000 Buildings and Equipment 500000 15...View the full answer

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Advanced Financial Accounting

ISBN: 978-0078025624

10th edition

Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker

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Question Posted: May 23, 2014 11:54 AM

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