7 trans On January 1, 2017 P purchased 80s of the common stock of for $80,000 Shad common stock of $80.000 and retained eamings of $12.000 at that time on December 31, 2021, the trial balances of the two companies were P s Cash 13.000 14.000 Accounts receivable 37.000 36.000 Investment in S Company 80,000 0 Plant and equipment 60.000 45.000 Land 18,000 12,000 Dividends declared 10.000 12.000 Inventory, 12/31 59,600 15,000 Cost of Sales and Expenses 50.000 30,000 Total debits 314,600 164,000 Total debits Liabilities Common stock Retained earnings Sales 314,600 10,000 120,000 55,000 120,000 9,600 164,000 6,000 80,000 30,000 48,000 0 Dividend income Total credits 314,600 164,000 Any difference between book value and the value implied by the purchase price relates to Land, You are required to: (a) Prepare the working paper entry on December 31, 2021. to establish reciprocity and convert to the equity metro Answer: Debit Credit Investment account 80,000 Retained earnings - P 80,000 (b) Prepare the working paper elimination entries on December 31, 2021, to eliminate the investment account Answer: Debit Credit 80,000 30,000 Common stock Retained earnings Difference - implied and book values Noncontrolling interest Investment in S company () Prepare the working paper elimination entries on December 31, 2021, to eliminate the intercompany dividende Answer: Debit Credit Dividend income- Dividend declared -S