6-1 The working paper elimination for Pakistan Corporation and subsidiary on March 31, Year 7, the date of the purchase-type business combination, was as follows: (a) Common Stock, $1 par-Sikkim Paid-in Capital in Excess of Par-Sikkim Retained Earnings-Sikkim Inventories-Sikkim (fifo cost) 50,000 100,000 150,000 20.000 50,000 80,000 Land-Sikkim Other Plant Assets-Sikkim (economic life 10 years) Goodwill-Sikkim (c) Investment in Sikkim Company Common Stock- Pakistan..........----- To eliminate intercompany investment and equity ac- counts of subsidiary on date of business combination; and to allocate excess of cost over carrying amounts of identifiable assets acquired, with remainder to good- will. (Income tax effects are disregarded.) 40,000 490.000 For the fiscal year ended March 31. Year 8. Sikkim Company reported net in- come of $60,000. Sikkim declared a cash dividend of $0.40 a share on March 1, Year 8, and paid the dividend on March 15. Year 8. (Sikkim had not declared or paid dividends during the year ended March 31. Year 7.) Sikkim uses the straight-line method for depreciation expense and amortization expense, both of which are included in operating expenses. Instructions a Prepare journal entries in the accounting records of Pakistan Corporation to record the operating results of Sikkim Company for the year ended March 31, Year 8. under the equity method of accounting. Disregard income taxes. b Prepare three-column ledger accounts for Pakistan Corporation's Investment in Sikkim Company Common Stock and Intercompany Investment Income ac- counts, and post the journal entries in a. c Prepare a working paper elimination for Pakistan Corporation and subsidiary on March 31. Year 8. in journal entry form. Disregard income taxes.