Name: The account balances are as of December 31, 2020 except where noted. P-CC S-CO $710.000 490,000 Selected Income Statement Amounts: Sales Cost of Goods Sold Gain on Sale of Equipment Earnings from Investment in Subsidiary Interest Revenue Interest Expense Depreciation $530,000 370,000 21,000 61,000 2,880 2.880 20,000 25,000 $ 15,000 Selected Balance Sheet Amounts {Debits/(Credits): Cash Notes Receivable Inventories Equipment Accumulated Depreciation Investment in Shaw Notes Payable Common Stock Additional Paid-In-Capital Retained Earnings $ 50,000 36,000 229,000 440,000 (200,000) 189,000 150.000 360,000 (120,000) (100,000) (250,000) (402,000) (36,000) (10,000) (40,000) (140,000) Selected Statement of Retained Earnings Amounts: Beginning Balance, January 1, 2020 Net Income Dividends Paid $272,000 210,000 80,000 $100,000 70,000 30,000 Additional Information: On January 2, 2020 P-Co purchased 90% of S-Co for $155,000. On that date S-Co's shareholders' equity equaled $150,000 and the fair values of S-Co's assets and liabilities equaled their carrying amounts. Excess, if any, is attributed to patents and is amortized over 10 years. On September 4, 2020 S-Co paid cash dividends of $30,000. On January 3, 2020 S-Co sold equipment with an original cost of $30,000 and a carrying value of $15,000 to P-Co for $36,000. The equipment had a remaining useful life of 3 years. Straight-line depreciation is used. On January 4, 2020 S-Co signed an 8% Note Payable. All interest payments were made as of December 31, 2018 During the year S-Co sold merchandise to P-Co for $60,000, which included a profit of $20,000. At year end 50% of the merchandise remained in P-Co's inventory. Required: 1. Which method is P-Co using to account for the investment in S-Co? How do you know? 2. What elimination entry(ies) are associated with the elimination of intercompany profits due to the sale of merchandise? 3. What elimination entry(ies) are necessary with the sale of equipment by S-Co to P-Co? 4. What elimination entry(ies) are associated with the note to S-Co? Why are the entry(ies) made