Purple Company owns 90 percent of the common stock and 60 percent of the preferred stock of Sage Corporation, both acquired at underlying book value on January 1, 20X1. At that date, the fair value of the noncontrolling interest in Sage common stock was equal to 10 percent of the book value of its common stock. Trial balances for the companies on December 31, 20X6, are as follows:

Sage preferred shares pay a 7.5 percent annual dividend and are cumulative. Preferred dividends for 20X6 were declared on December 31, 20X6, and are to be paid January 1, 20X7.

Required

a. Prepare the consolidation entries needed to complete a worksheet for 20X6.

b. Prepare a consolidation worksheet as of December 31, 20X6.

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Cash Accounts Receivable Dividends Receivable Inventory Buildings & Equipment (net) Investment in Sage Corporation: Preferred Stock Common Stock Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared: Preferred Stock Common Stock Accounts Payable Bonds Payable Dividends Payable Preferred Stock Common Stock Retained Earnings Sales Dividend Income Income from Sage Corporation Total Purple Company Debit $ 58,000 80,000 9,000 100,000 360,000 120,000 364,500 280,000 40,000 131,000 60,000 $1,602,500 Credit $ 100,000 300,000 200,000 435,000 500,000 9,000 58,500 $1,602,500 Sage Corporation Debit $100,000 120,000 200,000 270,000 170,000 30,000 20,000 15,000 10,000 $935,000 Credit $ 70,000 15,000 200,000 100,000 250,000 300,000 $935,000