On June 10, 20X8, Private Corporation acquired 60 percent of Secret Company’s common stock. The fair value of the noncontrolling interest was $32,800 on that date. Summarized balance sheet data for the two companies immediately after the stock purchase are as follows:

Required

a. Give the consolidation entries required to prepare a consolidated balance sheet immediately after the purchase of Secret Company shares.

b. Explain how consolidation entries differ from other types of journal entries recorded in the normal course of business.

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Item Cash Accounts Receivable Inventory Buildings & Equipment (net) Investment in Secret Company Total Accounts Payable Bonds Payable Common Stock Retained Earnings Total Private Corp. Book Value $ 25,800 30,000 80,000 120,000 49,200 $305,000 $ 25,000 150,000 55,000 75,000 $305,000 Secret Company Book Value $ 5,000 10,000 20,000 50,000 $85,000 $ 3,000 25,000 20,000 37,000 $85,000 Fair Value $ 5,000 10,000 25,000 70,000 $110,000 $ 3,000 25,000 $ 28,000