Master Corporation acquired 80 percent ownership of Stanley Wood Products Company on January 1, 20X1, for $160,000. On that date, the fair value of the noncontrolling interest was $40,000, and Stanley reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Master has used the equity method in accounting for its investment in Stanley.

Trial balance data for the two companies on December 31, 20X5, are as follows:

	Master Corporation		Stanley Wood Products Company
Item	Debit	Credit	Debit	Credit
Cash & Receivables	$ 81,000		$ 65,000
Inventory	260,000		90,000
Land	80,000		80,000
Buildings & Equipment	500,000		150,000
Investment in Stanley Wood Products Stock	188,000
Cost of Goods Sold	120,000		50,000
Depreciation Expense	25,000		15,000
Inventory Losses	15,000		5,000
Dividends Declared	30,000		10,000
Accumulated Depreciation		$ 205,000		$105,000
Accounts Payable		60,000		20,000
Notes Payable		200,000		50,000
Common Stock		300,000		100,000
Retained Earnings		314,000		90,000
Sales		200,000		100,000
Income from Subsidiary		20,000
	$1,299,000	$1,299,000	$465,000	$465,000

Additional Information

1.On the date of combination, the fair value of Stanley's depreciable assets was $50,000 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period.

2.There was $10,000 of intercorporate receivables and payables at the end of 20X5.

3. Stanley sold some equipment that was owned at the date of the combination for $6,000. The equipments original cost was $10,000, and Stanley had recorded $4,800 of accumulated depreciation at the date of sale. The equipments fair value at the date of combination was $9,500 and had accumulated depreciation of $800.

4. Stanley purchased $20,000 of available-for-sale securities on July 1. At December 31, 20X5, these securities had a fair value of $18,000.

Required:

1. Prepare the 20X5 journal entries recorded on Stanleys books related to all entries above.

2. Prepare the 20X5 journal entries Master records to the Investment in Stanley Wood Products Stock related to all entries above.

3. Prepare an trial balance incorporating all entries recorded by Master and Stanley.