Canton Corporation is a wholly owned subsidiary of Winston Corporation. Winston acquired ownership of Canton on January 1, 20X3, for \(\$ 28,000\) above the reported net assets of Canton. At that date, Canton reported common stock outstanding of \(\$ 60,000\) and retained earnings of \(\$ 90,000\). The purchase differential is assigned to equipment with an economic life of seven years at the date of the business combination. Canton reported net income of \(\$ 30,000\) and paid dividends of \(\$ 12,000\) in \(20 \times 3\).

\section*{Required}

a. Give the journal entries recorded by Winston Corporation during \(20 \times 3\) on its books if Winston accounts for its investment in Canton using the equity method.

b. Give the eliminating entries needed at December \(31,20 \times 3\), to prepare consolidated financial statements.

Canton Corporation is a majority-owned subsidiary of Winston Corporation. Winston acquired 75 percent ownership of Canton on January 1,20X3, for \(\$ 133,500\). At that date, Canton reported common stock outstanding of \(\$ 60,000\) and retained earnings of \(\$ 90,000\). The purchase differential is assigned to equipment with an economic life of seven years at the date of the business combination. Canton reported net income of \(\$ 30,000\) and paid dividends of \(\$ 12,000\) in \(20 \times 3\).
\section*{Required}

a. Give the journal entries recorded by Winston Corporation during \(20 \times 3\) on its books if Winston accounts for its investment in Canton using the equity method.

b. Give the eliminating entries needed at December \(31,20 \times 3\), to prepare consolidated financial statements.