Weal Corporation purchased 60 percent of the shares of Modern Products Company on December \(31,20 \times 7\), for \(\$ 240,000\) and 20 percent on January \(1,20 \times 9\), for \(\$ 96,000\). Summarized balance sheets for Modem Products Company on the dates indicated are as follows:

Modem Products Company paid dividends of \(\$ 20.000\) in each of the three years. Weal Corporation uses the basic equity method in accounting for its investment in Modern Products Company and amortizes all purchase differentials over 10 years against the related investment income. All differentials are assigned to patents in the consolidated financial statements.
\section*{Required}

a. Compute the balance in Weal's Investment in Modern Products Company Stock account on December 31. \(20 \mathrm{X} 8\).

b. Compute the balance in Weal's Investment in Modern Products Company Stock account on December 31. 20X9.

c. Prepare the eliminating entries needed as of December 31. 20X9. to complete a three-part consolidation workpaper.

Transcribed Image Text:

December 31 20X8 20X9 20X7 Cash $ 40,000 $ 70,000 $ 90.000 Accounts Receivable 50.000 90.000 120,000 Inventory 70,000 100,000 160,000 Buildings and Equipment (net) 340,000 320.000 300.000 Total Assets $500,000 $580,000 $670,000 Accounts Payable $ 50,000 $100.000 $140,000 Bonds Payable 100.000 100.000 100,000 Common Stock 150,000 150,000 150.000 Retained Earnings 200,000 230,000 280,000 Total Liabilities and Equities $500,000 $580.000 $670.000