Amber Corporation reported the following summarized balance sheet data on December 31, 20X6:

Assets$ 600,000Liabilities$ 100,000Common Stock300,000Retained Earnings200,000Total$ 600,000Total$ 600,000

On January 1, 20X7, Purple Company acquired 100 percent of Ambers stock for $500,000. At the acquisition date, the book values and fair values of Ambers assets and liabilities were equal. Amber reported net income of $50,000 for 20X7 and paid dividends of $20,000.

Required:

1. Give the journal entries recorded by Purple on its books during 20X7 if it accounts for its investment in Amber using the equity method.

A. Record the initial investment in Amber Corporation.

B. Record Purple Co.'s 100% share of Amber Corp.'s 20X7 income.

C. Record Purple Co.'s 100% share of Amber Corp.'s 20X7 dividend.2. Give the consolidation entries needed on

2. December 31, 20X7, to prepare consolidated financial statements. A.Record the basic consolidation entry.