EXERCISE 4-4 Workpaper Eliminating Entries, Losses by Subsidiary Lo Company purchased 85% of the outstanding common stock of Serena Company on December 31, 20| $310,000 cash. On that date, Serena Company's stockholders' equity consisted of the following: Poco Company 14, for Common stock Other contributed capital Retained earnings $240,000 55,000 50,000 $345,000 During 2017, Serena Company distributed a dividend in the amount of $12,000 and at year-end reporteda net loss of $10,000. During the time that Poco Company has held its investment in Serena Company, Serena Company's retained earnings balance has decreased $29,500 to a net balance of $20.500 after closing on December 31, 2017. Serena Company did not declare or distribute any dividends in 2015 or 2016. The difference between book value and the value implied by the purchase price relates to goodwill. Required: A. Assume that Poco Company uses the equity method. Prepare in general journal form the entries needed in the preparation of a consolidated statements workpaper on December 31, 2017. Explain why the partial and com- plete equity methods would result in the same entries in this instance. B. Assume that Poco Company uses the cost method. Prepare in general journal form the entries needed in the prege ration of a consolidated statements workpaper on December 31,2017 176