Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2018, the companies had the following account balances:

Intra-entity sales of $320,000 occurred during 2017 and again in 2018. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2017, with $50,000 unsold on December 31, 2018.

1. Prepare the consolidation entries required by Akron in 2018.

(a) Prepare Entry *G to remove the 2017 intra-entity gross profit from the beginning account balances.

(b) Prepare Entry E to recognize the excess amortization expense for the current period.

(c) Prepare Entry TI to eliminiate the intra-entity transfers of inventory during 2018.

(d) Prepare Entry G to remove the 2018 intra-entity gross profit from the ending account balances.

2. Prepare a consolidated income statement for the year ending December 31, 2018.

Akron Sales Cost of goods sold Operating expenses Investment income Dividends declared Toledo 1,100,000 600,000 500,000 400,000 400,000 220,000 Not given 80,000 30,000