Proud Corporation purchased 80 percent of the voting stock of Stergis Company on January 1, 20X3, at underlying book value. Proud Corporation uses the equity method in accounting for its ownership of Stergis during 20X3. On December 31, 20X3, the trial balances of the two companies are as follows:

\section*{Required}

a. Give all eliminating entries required as of December \(31,20 \mathrm{X} 3\), to prepare consolidated financial statements.

b. Prepare a three-part consolidation workpaper.

c. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X3

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Proud Corporation Stergis Company Item Debit Credit Debit Credit Current Assets $173,000 $105,000 Depreciable Asset 500,000 300,000 Investment in Stergis Company Stock 136,000 Depreciation Expense 25.000 15,000 Other Expenses 105,000 75,000 Dividends Declared 40,000 10,000 Accumulated Depreciation Current Liabilities Long-Term Debt $175,000 $ 75.000 50,000 40,000 100,000 120,000 Common Stock 200,000 100,000 Retained Earnings 230,000 50,000 Sales 200,000 120,000 Income from Subsidiary 24,000 $979,000 $979,000 $505,000 $505.000