On January 1, 2012, P Company purchased 95% of the outstanding common stock of S Company for $160,000. At that time, Sessions' stockholders' equity consisted of common stock, $120,000; other contributed capital, $10,000; and retained earnings, $23,000. Any difference between the implied value of the company and the book value is attributable to goodwill. On December 31, 2012, the two companies' trial balances were as follows:

				P	S
Cash				62,000	30,000
Accounts Receivable				32,000	29,000
Inventory				30,000	16,000
Investment in Sessions Company				165,700	-
Plant and Equipment				105,000	82,000
Land				29,000	34,000
Dividends Declared				20,000	20,000
Cost of Goods Sold				130,000	40,000
Operating Expenses				20,000	14,000
Total Debits				593,700	265,000
Accounts Payable				19,000	12,000
Other Liabilities				10,000	20,000
Common Stock				180,000	120,000
Other Contributed Capital				60,000	10,000
Retained Earnings, 1/1				40,000	23,000
Sales				260,000	80,000
Equity in earnings of Sessions				24,700	-
Total Credits				593,700	265,000

PERFORM USING COST METHOD, THEN PERFORM USING EQUITY METHOD

Step 1.Prepare a T-Account to keep track of P's Investment in S. Record the date of acquisision entry.

Step 2:Prepare the Computation and Allocation of Difference Schedule.

Step 3: Prepare the investment elimination entries as of the date of acquisition and year after acquisition.

Step 4: Prepare the consolidating financial statement workpaper.