$ 90,000 61,000 184,000 88,000 Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $188,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Item Cash Accounts Receivable Inventory Land Prince Corporation Debit Credit Sword Company Debit $ 31,000 66,000 103,000 26,000 Credit Buildings and Equipment 498,000 154,000 Investment in Sword Company 258,000 Cost of Goods Sold 498,000 253,000 Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable 20,000 10,000 55,000 55,000 61,000 20,000 $ 144,000 $ 50,000 65,000 27,000 194,000 95,000 Common Stock 284,000 50,000 Retained Earnings 344,000 85,000 Sales 692,000 411,000 Income from Sword Company $1,813,000 90,000 $1,813,000 $718,000 $718,000 Additional Information 1. On January 1, 20X7, Sword reported net assets with a book value of $135,000. A total of $20,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7. 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for its investment in Sword. 4. Detailed analysis of receivables and payables showed that Sword owed Prince $22,000 on December 31, 20X7. c. Prepare a three-part consolidation worksheet as of December 31, 20X7. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Income Statement Sales Less: COGS Less: Depreciation expense Less: Other expenses PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Consolidation Entries Prince Corp Sword Co DR CR Consolidated $ 0 Income from Sword Co. 0 Net Income $ 0 $ 0 $ 0 $ 0 $ Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Assets Cash Accounts receivable Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Sword Co. Goodwill Total Assets Liabilities & Equity Accounts payable Mortgages payable $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Common stock Retained earnings Total Liabilities & Equity $ 0 $ 0 $ 0 $ 0 $ 0