3. (25 pts) Abbot Company purchased 80% of Costello Company on January 1, 20X1. The purchase price paid was $600,000. On that day, the book value of Costello was $500,000. Excess of cost over book value is due to goodwill. Included in Costello's income are intercompany sales to Abbot of $40,000 with a cost to Costello of $25,000. 30% of this inventory is on hand in the Abbot inventory at December 31, 20X3. In addition, inventory sold at a profit of $5,000 was in the inventory of Abbot at December 31, 20x2. Complete the consolidation worksheet. First, complete the financial statements below. Consolidated Bal. Below are the balances of accounts of Abbot and Costello at December 31, 20X3. Consolidation Entries Abbot Costello Dr. Cr. Sales $50,000 $250,000 Expenses $30,000 $150,000 Income from S. Income $100,000 NCI Controlling Interest $190,000 Retained Earnings Jan 1, 10 Dividends Retained Earnings Dec 31, 10 $700,000 100,000 $290,000 Cash Receivables Inventory Equipment (net) Patents Investment in Costello $120,000 90,000 100,000 100,000 $30,000 70,000 100,000 350,000 50,000 796,400 Goodwill Land Building (net) 100,000 120,000 $1,426,400 100,000 100,000 $800,000 3. (25 pts) Abbot Company purchased 80% of Costello Company on January 1, 20X1. The purchase price paid was $600,000. On that day, the book value of Costello was $500,000. Excess of cost over book value is due to goodwill. Included in Costello's income are intercompany sales to Abbot of $40,000 with a cost to Costello of $25,000. 30% of this inventory is on hand in the Abbot inventory at December 31, 20X3. In addition, inventory sold at a profit of $5,000 was in the inventory of Abbot at December 31, 20x2. Complete the consolidation worksheet. First, complete the financial statements below. Consolidated Bal. Below are the balances of accounts of Abbot and Costello at December 31, 20X3. Consolidation Entries Abbot Costello Dr. Cr. Sales $50,000 $250,000 Expenses $30,000 $150,000 Income from S. Income $100,000 NCI Controlling Interest $190,000 Retained Earnings Jan 1, 10 Dividends Retained Earnings Dec 31, 10 $700,000 100,000 $290,000 Cash Receivables Inventory Equipment (net) Patents Investment in Costello $120,000 90,000 100,000 100,000 $30,000 70,000 100,000 350,000 50,000 796,400 Goodwill Land Building (net) 100,000 120,000 $1,426,400 100,000 100,000 $800,000