Preparing a consolidation work sheet. (Requires coverage of Appendix 1 1.l.) The condensed balance sheets of Ely Company and Sims Company at December 31 appear in Exhibit 1 1.21. The receivables of Ely Company and the liabilities of Sims Company contain an advance from Ely Company to Sims Company of $7,500. Ely Company acquired 100 percent of the capital slock of Sims Company on the market at January 2 of this year for $70,000, At that date, the balance in the Retained Earnings account of Sims Company was $40,000. Amortize goodwill, if any. over 10 years.

Prepare a consolidation work sheet for Ely Company and Sims Company. The adjustment and elimination columns should contain entries to (1 ) eliminate the Investment in the Sims Company account and (2) eliminale intercompany obligations.