Presented below are selected amounts from the separate unconsolidated financial statements of Poe Corporation and its 90 percent owned subsidiary, Shaw Company, at December 31, 20X2.

Additional information follows:

1. On January 2, 20X2, Poe Corporation purchased 90 percent of Shaw Company's outstanding common stock for cash of \(\$ 155,000\). On that date, Shaw's stockholders' equity equaled \(\$ 150,000\), and the fair values of Shaw's assets and liabilities equaled their carrying amounts. Poe has accounted for the acquisition as a purchase. On December 31, 20X2, the management of Poe Corporation reviewed the amount attributed to goodwill as a result of its purchase of Shaw Company common stock and found no evidence of impairment.
2. On September 4, 20X2, Shaw paid cash dividends of \(\$ 30,000\).
3. On December 31, 20X2, Poe recorded its equity in Shaw's earnings.
\section*{Required}

a. The following represent transactions between Poe and Shaw during 20X2 . For each transaction, determine the dollar amount by which consolidated net income (before considering minority interest) will be increased or decreased when the consolidating (eliminating) entries are prepared:
(1) On January 3, 20X2, Shaw sold equipment with an original cost of \(\$ 30,000\) and a carrying value of \(\$ 15,000\) to Poe for \(\$ 36,000\). The equipment had a remaining life of three years and was depreciated using the straight-line method by both companies.
(2) During 20X2, Shaw sold merchandise to Poe for \(\$ 60,000\), which included profit of \(\$ 20,000\). At December 31, 20X2, half of this merchandise remained in Poe's inventory.
(3) On December 31, 20X2, Poe paid \(\$ 91,000\) to purchase 50 percent of the outstanding bonds issued by Shaw. The bonds mature on December 31, 20X8, and were originally issued at

par. The bonds pay interest annually on December 31 of each year, and the interest was paid to the prior investor immediately before Poe's purchase of the bonds.

b. Determine the amount to be reported as goodwill at January 2, 20X2.

c. Choose the amount to be reported in the consolidated financial statements at December 31, 20X2, for each of the financial statement elements (a through 1) listed below:
\section*{Amount to be reported:}
(1) Equal to the sum of the amounts reported on Poe and Shaw's separate unconsolidated financial statements.
(2) Less than the sum of the amounts reported on Poe and Shaw's separate unconsolidated financial statements.
(3) Equal to the amount reported by Poe.
(4) Equal to the amount reported by Shaw.
(5) Eliminated entirely in consolidation.
(6) Shown in the consolidated financial statements but not in the separate statements of either company.
(7) Not reported in the consolidated financial statements or the separate statements of either company.
\section*{Financial Statement Element:}

a. Cash

b. Equipment

c. Investment in Subsidiary

d. Bonds Payable

e. Minority Interest

f. Common Stock g. Beginning Retained Earnings h. Dividends Paid i. Gain on Retirement of Bonds j. Cost of Goods Sold \(k\). Interest Expense l. Depreciation Expense

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Poe Shaw Selected Income Statement Amounts Sales $710,000 $530,000 Cost of Goods Sold 490,000 370.000 Gain on Sale of Equipment 21.000 Earnings from Investment in Subsidiary 63.000 Interest Expense 16,000 Depreciation 25.000 20,000 Selected Balance Sheet Amounts Cash $ 50.000 Inventories Equipment Accumulated Depreciation Investment in Shaw Stock Investment in Bonds 229,000 $ 15.000 150,000 440.000 360.000 (200,000) (120.000) 191,000 100.000 Discount on Bonds (9.000) Bonds Payable (200.000) Common Stock (100,000) (10,000) Additional Paid-In Capital (250,000) (40,000) Retained Earnings (402,000) (140,000) Selected Statement of Retained Earnings Amounts Beginning Balance, December 31, 20X1 $272,000 $100,000 Net Income 212.000 70.000 Dividends Paid 80.000 30,000