Boxwell Corporation purchased 60 percent of the ownership of Conway Company on January 1, \(20 X 7\), for \(\$ 277,500\). Conway reported the following net income and dividend payments:

On January 1. 20X7. Conway had \(\$ 250,000\) of \(\$ 5\) par value common stock outstanding and retained earnings of \(\$ 150,000\). At that date, Conway held land with a book value of \(\$ 22,500\) and a market value of \(\$ 30.000\) and equipment with a book value of \(\$ 320.000\) and market value of \(\$ 360,000\). All of the remainder of the purchase price was attributable to an increase in the value of patents which had a remaining useful life of 10 years. All depreciable assets held by Conway at the date of acquisition had a remaining economic life of six years.

\section*{Required}

a. Prepare the eliminating entries needed at January 1, 20X7, to prepare a consolidated balance sheet.

b. Compute the balance reported by Boxwell Corporation as its investment in Conway at January \(1,20 \times 9\).

c. Prepare the journal entries recorded by Boxwell with regard to its investment in Conway during \(20 \times 9\).

d. Prepare the eliminating entries needed at December \(31,20 \times 9\), to prepare a three-part consolidation workpaper.

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Year Net Income Dividends Paid 20X7 $45,000 $25.000 20X8 55,000 35.000 20X9 30.000 10,000