Bigelow Corporation purchased 80 percent of Granite Company on January 1, 20X7, for \(\$ 173,000\). The trial balances for the two companies on December \(31,20 \times 7\), included the following amounts:

1. On January \(1,20 \times 7\), Granite Company reported net assets with a book value of \(\$ 150,000\). A total of \(\$ 20,000\) of the purchase price is applied to goodwill which was not impaired in \(20 \times 7\).
2. Granite Company 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 depreciable assets.
3. Bigelow Corporation used the equity method in accounting for its investment in Granite.
4. Detailed analysis of receivables and payables showed that Granite owed Bigelow Corporation \(\$ 16,000\) on December 31, 20X7.
\section*{Required}

a. Give all journal entries recorded by Bigelow Corporation with regard to its investment in Granite Company during 20X7.

b. Give all eliminating entries needed to prepare a full set of consolidated financial statements for 20X7.

c. Prepare a three-part consolidation workpaper as of December 31, 20X7.

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Bigelow Corporation Item Debit Credit Cash Accounts Receivable $ 38.000 Granite Company Debit $ 25,000 Credit 50,000 55.000 Inventory 240,000 100,000 Land 80,000 20.000 Buildings and Equipment 500,000 150,000 Investment in Granite Company Stock 202.000 Cost of Goods Sold 500,000 250,000 Depreciation Expense 25.000 15,000 Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable 75.000 75,000 50,000 20,000 $ 155,000 $ 75,000 70,000 35,000 200,000 50,000 Common Stock 300,000 50,000 Retained Earnings 290,000 100,000 Sales 700,000 400,000 Income from Subsidiary 45,000 $1,760,000 $1.760,000 $710.000 $710,000