Lintner Corporation purchased 80 percent of the voting stock of Knight Company on January 1, 20X6, at underlying book value. Lintner uses the cost method in accounting for its investment in Knight Company. Knight reported \(\$ 50,000\) of retained earnings at the time of acquisition. Trial balance data for the two companies on December 31, 20X7, are as follows:

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a. Prepare eliminating entries as of December 31, 20X7, for a full set of consolidated statements.

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

c. Prepare a consolidated income statement, balance sheet, and retained earnings statement for 20X7.

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Item Current Assets Depreciable Assets Investment in Knight Company Stock Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Common Stock Retained Earnings Sales Dividend Income Lintner Corporation Debit Credit $ 183.000 Knight Company Debit $ 80.000 Credit 500.000 300.000 120,000 25.000 15,000 251,000 25.000 155.000 20.000 $ 200.000 $ 90.000 120,000 110.000 200.000 100.000 268.000 70.000 300.000 200.000 16.000 $1.104.000 $1.104.000 $570,000 $570,000