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A on January 1, 2009, Paul Company purchased 80% of the voting stock of Simon Company for $1,360,000 when Simon Company had retained earnings and

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A on January 1, 2009, Paul Company purchased 80% of the voting stock of Simon Company for $1,360,000 when Simon Company had retained earnings and capital stock in the amounts of $ 450,000 and $1,000,000, respectively. The difference between implied and book value is allocated to a franchise and is amortized over 25 years. Simon Company's retained earnings amount to $780,000 on January 1, 2012, and $960,000 on December 31, 2012. In 2012,Simon Company reported net income of $270,000 and declared dividends of $90,000. Paul Company reported net income from Independent operations in 2012 In the amount of $700,000 and retained earnings on December 31, 2012, of $1,500,000. During 2012, Intercompany sales of merchandise from Paul to Simon amounted to $70,000 and from Simon to Paul were $50,000. Unrealized profits on January 1 and on December 31, 2012, resulting from Intercompany sales are as summarized here: Resulting from Sales by Simon Company to Paul Company Sales by Paul Company to Simon Company Unrealized Intercompany Profit on 1/1/12 12/31/12 $20,000 $10,000 30,000 5,000 Prepare the elimination entries for consolidated work paper (10 points)

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