C- On January 1, 2018 Philly Corporation paid $40,500 for a 90% interest in Skelly Corporation. On that date Skelly capital stock was $25,000 and its Retained Earnings was $7,500. Any excess will be assigned to goodwill. Further information: 1. During 2018, Philly's sales to Skelly were $12,000, Skelly managed to sell 50% of this merchandise. (The other half was sold in 2019.) 2. During 2019. Philly's sales to Skelly were $15,000 of which Skelly managed to sell 40% of this merchandise. At year-end 2019, Skelly owed Philly $3,750 for the inventory purchased during 2019. Philly sells merchandise to Skelly at 120% of Philly's cost. 3. On January 1, 2019. Philly sold equipment with a book value of $5,000 and a remaining useful life of four years and no salvage value to Skelly for $7.000. Straight-line depreciation is used. 4. Skelly's income for 2018 was $10,000 and Skelly's dividends received by Philly was $4,500 5. Separate company financial statements for Philly Corporation and Subsidiary at December 31, 2019 are summarized in the first two columns of the consolidation working papers. Required: 1) Prepare all elimination entries in 2019 (Including the entries not affecting the consolidated Income statement). Show all your calculations. 2) Complete the working papers to consolidate the financial statements of Philly Corporation and subsidiary for the year ended December 31, 2019, Philly Skelly Consolidated Eliminations Debit Credit S 150,000 $35,000 11.500 2.000 (65,000) (11,000) ( 70.000) (9,000) INCOME STATEMENT Sales Income from Skelly Gain on equipment sale Cost of Sales Other Expenses Noncontrolling interest share Net income Retained Earnings 1/1 Add: Net income Dividends Retained Earnings 12.31 BALANCE SHEET $ 28.500 S 15.000 S 23,750 S 12,500 28.500 15.000 ( 17,500) ( 5,000) $ 34,750 S 22,500 Cash Receivables Inventories Equipment-net Land Investment in Skelly Goodwill TOTAL ASSETS LIAB. & EQUITY S 13,750 $ 7,500 17.500 10.000 25.000 11.250 60.000 22.500 10.000 8.750 51.000 S 177,250 $60,000 Accounts payable Capital Stock Retained Earnings 11 Nopont. Interest 12/31 Noncnirl Interest TOTAL LIAB & EQUITIES s 17,500 $ 12,500 125,000 25,000 34,750 22.300 IS 172250 $60,000 Q4 Narks)