7) Please show all workings, let the answers be concise.

Problem 7 (22.5%) Matthews Co. obtained all of the common stock of Jackson Co. on January 1, 2021. As of that date, Jackson had the following trial balance: Accounts payable Accounts receivable Additional paid -in capital Buildingsnet (20-year life) Cash and short-term investments Common stock Equipment-net (8-year life) Inventory Land Long-term liabilities (mature 1/1/29) Retained earnings, 1/1/18 Supplies Totals Debit $50,000 140,000 70,000 240,000 110,000 90,000 Credit $ 60,000 60,000 300,000 -12- 180,000 120,000 20,000 $720,000 3720,000 During 2021, Jackson reported net income of $100,000 while paying dividends of $40,000. During 2021, Jackson reported net income of $180,000 while paying dividends of $50,000. Assume that Matthews Co. acquired the common stock of Jackson Co. for $618,000 in cash. As of January 1, 2021, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. The Long-term liabilities represent bonds payable which had a fair value of $168,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is attributable to goodwill Matthews decided to use the equity method for this investment. Required (A.) Prepare consolidation worksheet entries for December 31, 2021 & 2022 assuming the equity method was used. Enter your answer on the examination worksheet which is provided on the next page. (B.) Assume the initial value method was used instead. What would journal entry C be for 2023 (the beginning of the third year)? Problem 7 PART A equity method Consideration transferred for Jackson Co. Book value Excess of consideration transferred over book value Excess consideration transferred, assigned to specific accounts based on fair values Land Buildings Equipment Goodwill Bonds payable Total. WORKSHEET ENTRIES-2021 Equity method ENTRY S ENTRY A ENTRY I ENTRY D ENTRY E