AutoSave OFF Home Insert Draw Design Layout GQ1_VerA_Sp21_clean - Saved to my Mac References Mailings Review View Tell me Share Comments G Times New... 12 A A Aav P AaBbCcDdEe | AaBbCcDdEe AaBbCcD AaBbCcDdE AaBb AaBbCcDdEe AaBbCcDdEe Paste BIU A A Normal No Spacing Heading 1 Heading 2 Title Subtitle Subtle Emph... Styles Pane Dictate Page 1 of 1 390 words English (United States) Instruction: Prepare a solution to this problem in Word or Excel and name your file as follows: LastName_FirstName_GA1. You must submit your own solution file but are allowed to work with your group during the group meeting. Use the submission link on Blackboard to submit your solution file by Tuesday, January 26, 11:59 p.m. Patterson acquired 35 percent of the outstanding voting stock of Shapiro Company on January 1, 2019, for $240,000 in cash. The book value of Shapiro's net assets on that date was $600,000, although one of the company's buildings, with a $60,000 carrying (book) amount, was worth $160,000. This building had a 10-year remaining life. In addition, Shapiro owned a royalty agreement with a 5-year remaining life that was overvalued by $30,000 (i.e., the market value was less than its book value). Shapiro reported a $45,000 net income and a $20,000 other comprehensive loss for 2019. The company managed to declare and pay a $10,000 cash dividend during the year. Shapiro sold inventory with an original cost of $60,000 to Patterson during 2019 at a transfer price of $100,000. Patterson still held $25,000 of the transfer price in inventory as of December 31, 2019. These goods were to be sold to outside parties during 2020. During 2020, Shapiro reported a $60,000 net income. It made additional sales with a transfer price of $80,000 to Patterson during the period. The original cost of the merchandise was $50,000. All but 20 percent of this inventory had been resold to outside parties by the end of 2020. Required: (Be sure to show calculations to get credit) 1. (40 points) Assume that the equity method is applied. Prepare all journal entries for Patterson for 2019 and 2020 in connection with this investment. Provide supporting calculations if necessary. (Hint: There are about 10 entries to record the initial investment in Shapiro, equity income from Shapiro, other comprehensive income (loss), amortization of excess payment, dividend declaration, and adjustments for deferred profit from inventory sales from Shapiro to Patterson.) 2. (5 points) Determine the balance of Investment in Shapiro as of December 31, 2019 and December 31, 2020. Show the posting entries to the Investment t-account. 3. (5 points) Determine the total Equity Income in Shapiro for 2019 and 2020. Show calculations. 127% Focus