Brown Company owns 90 percent of the common stock and 60 percent of the preferred stock of White Corporation, both acquired at underlying book value on January 1, 20X1. Trial balances for the companies on December 31, 20X6, are as follows:

White Corporation's preferred shares pay a 7.5 percent annual dividend and are cumulative. Preferred dividends for 20X6 were declared on December 31, 20X6, and are to be paid January 1, \(20 \times 7\).
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a. Prepare the eliminating entries needed to complete a full consolidation workpaper for 20X6.

b. Prepare a consolidation workpaper as of December 31, 20X6.

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Brown Company White Corporation Credit Debit Credit Debit Cash $ 58,000 $100,000 Accounts Receivable 80.000 120,000 Dividends Receivable 9,000 Inventory 100.000 200.000 Buildings and Equipment (net) 360,000 270,000 Investment in White Corporation: Preferred Stock 120.000 Common Stock 364,500 Cost of Goods Sold 280,000 170.000 Depreciation and Amortization 40.000 30,000 Other Expenses 131,000 20,000 Dividends Declared: Preferred Stock 15,000 Common Stock 60.000 10.000 Accounts Payable $ 100.000 $ 70,000 Bonds Payable 300.000 Dividends Payable 15.000 Preferred Stock Common Stock 60.000 15.000 10.000 Accounts Payable Bonds Payable Dividends Payable $ 100.000 300.000 $ 70,000 15.000 Preferred Stock Common Stock 200.000 Retained Earnings Sales Dividend Income Income from Subsidiary Total 200.000 435.000 500,000 9,000 58.500 $1,602,500 $1.602.500 $935.000 $935.000 100,000 250,000 300,000