Boxwell Corporation purchased 60 percent of Conway Company on January 1, 20X7, for a total of $277,500. Conway reported the following operating results for the next three years:

Year Net Income Dividends Paid 20X7 $45,000 $25,000 20X8 $55,000 $35,000 20X9 $30,000 $10,000

On January 1, 20X7, Conway has $250,000 of $5 par common stock outstanding and retained earnings of $150,000. At that date, Conway held land with a book value of $22,500 and a market value of $30,000 and equipment with a book value of $320,000 and a market value of $360,000. The remainder of the purchase price was attributable to patents, which had a remaining economic life of 10 years. All depreciable assets held by Conway on the date of acquisition had a remaining economic life of six years.

Analyze the data given and answer the following question-

• 1.Prepare the eliminating entries needed at January 1, 20X7, to prepare a consolidated balance sheet.
• 2.Compute the balance of the Boxwell's investment in Conway at January 1, 20X9, assuming the equity method is used.
• 3.Prepare the journal entries recorded by Boxwell with regard to its investment in Conway during 20X9.
• 4.Prepare the eliminating entries needed at December 31, 20X9, to prepare the consolidated income statement, retained earnings statement, and balance sheet.