The following items appeared in the first two columns of a work sheet prepared to consolidate the balance sheets of Upper Company and Lower Company on the day Upper Company gained control of Lower Company by purchasing 6,375 shares of its \(\$ 50\) par value common stock at \(\$ 65\) per share.

At the time Upper Company acquired control of Lower Company, it took Lower Company's note in exchange for \(\$ 37,500\) in cash and it sold and delivered \(\$ 7,500\) of equipment at cost to Lower Company on open account (account receivable). Both transactions are reflected in the foregoing accounts.
\section*{Required}
1. Prepare a work sheet to consolidate the balance sheets of the two companies and prepare a consolidated balance sheet.
2. Under the assumption that Lower Company earned \(\$ 37,500\) during the first year after it was acquired by Upper Company, paid out \(\$ 22,500\) in dividends, and retained the balance of its earnings in its operations, give the entry to eliminate Upper Company's investment in the subsidiary and Lower Company's stockholders' equity accounts at the year's end.
Problem 15-4 Foreign currency transactions (L.O. 5)

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Cash. Assets Note receivable, Lower Company Accounts receivable, net. Inventories Investment in Lower Company.. Equipment, net Buildings, net Land. Total assets. Liabilities and Stockholders' Equity Upper Lower Company Company $ 28,125 $ 41,250 37,500 105,000 90,000 157,500 131,250 414,375 300,000 262,500 318,750 75,000 $1,436,250 $525,000 Accounts payable. $ 78,750 $ 37,500 Note payable, Upper Company Common stock 937,500 37,500 375,000 Retained earnings. 420,000 75,000 Total liabilities and stockholders' equity. $1,436,250 $525,000