Exercise 7-10 (Algo) Sale of Equipment to Subsidiary in Current Period LO 7-5 On January 1, 20X7, Pillow Corporation sold to Sheet Corporation equipment it had purchased for $195,000 and used for eight years. Pillow recorded a gain of $25,900 on the sale. The equipment has a total useful life of 15 years and is depreciated on a straight-line basis. Pillow holds 60 percent of Sheet's voting common shares. Required: a. Prepare the journal entry made by Pillow on January 1,20X7, to record the sale of equipment. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. b. Prepare the journal entries recorded by Sheet during 207 to record the purchase of equipment and year-end depreciation expense. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. c. Prepare the consolidation entry or entries related to the intercompany sale of equipment needed at December 31,207, to prepare a full set of consolidated financial statements. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. d. Prepare the consolidation entry or entries related to the equipment required at January 1,208, to prepare a consolidated balance sheet only. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Exercise 7-10 (Algo) Sale of Equipment to Subsidiary in Current Period LO 7-5 On January 1, 20X7, Pillow Corporation sold to Sheet Corporation equipment it had purchased for $195,000 and used for eight years. Pillow recorded a gain of $25,900 on the sale. The equipment has a total useful life of 15 years and is depreciated on a straight-line basis. Pillow holds 60 percent of Sheet's voting common shares. Required: a. Prepare the journal entry made by Pillow on January 1,20X7, to record the sale of equipment. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. b. Prepare the journal entries recorded by Sheet during 207 to record the purchase of equipment and year-end depreciation expense. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. c. Prepare the consolidation entry or entries related to the intercompany sale of equipment needed at December 31,207, to prepare a full set of consolidated financial statements. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. d. Prepare the consolidation entry or entries related to the equipment required at January 1,208, to prepare a consolidated balance sheet only. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field