Eliminations, equity, 100%, bonds with straight-line. Since its 100% acquisition of Dancer Corporation stock on December 31, 2012, Jones Corporation has maintained its investment under the equity method. However, due to Dancers earning potential, the price included a $40,000 payment for goodwill. At the time of the purchase, the fair value of Dancers assets equaled their book value. On January 2, 2014, Dancer Corporation issued 10-year, 7% bonds at a face value of $50,000. The bonds pay interest each December 31. On January 2, 2016, Jones Corporation purchased all of Dancer Corporations outstanding bonds for $48,000. The discount is amortized on a straight-line basis. They have been included in Joness long-term investment in bonds account. Below are the trial balances of both companies on December 31, 2016. PROBLEMS

Jones Corporation Dancer Corporation

Cash .................................................... 70,500 67,500

AccountsReceivable........................................ 450.000 75,000

Inventory ................................................. 200,000 65,000

InvestmentinBonds......................................... 48,250

PlantandEquipment(net) .................................... 2,420,000 196,000

InvestmentinDancerCorporation.............................. 350,000

AccountsPayable .......................................... (275,000) (18.000)

BondsPayable(7%) ........................................ (50,000)

CommonStock($10par)Jones.............................. (1,000,000)

Paid-InCapitalinExcessofParJones.......................... (750,000)

RetainedEarnings,January1,2016Jones ..................... (730,000)

CommonStock($10par)Dancer............................. (100,000)

Paid-InCapitalinExcessofParDancer ........................ (130,000)

RetainedEarnings,January1,2016Dancer.................... (80,000)

Sales .................................................... (2,500,000) (540,000)

CostofGoodsSold......................................... 1,000,000 405,000

OtherExpenses............................................ 720,000 106,000

InterestIncome............................................. (3,750)

InterestExpense............................................ 0 3,500

Totals.................................................. 0 0

1. Prepare the worksheet entries needed to eliminate the intercompany debt on Required December 31, 2016.

2. Prepare a consolidated income statement for the year ended December 31, 2016.

Note: No worksheet is required.