On January 1, 2016, Monica Company acquired 70 percent of Young Companys outstanding common stock for $798,000. The fair value of the noncontrolling interest at the acquisition date was $342,000. Young reported stockholders equity accounts on that date as follows:

Problem 5-34 (LO 5-2, 5-3, 5-4, 5-5, 5-7) On January 1, 2016, Monica Company acquired 70 percent of Young Company's outstanding common stock for $798,000. The fair value of the noncontrolling interest at the acquisition date was $342,000. Young reported stockholders' equity accounts on that date as follows: Common stock-$10 par value 200,000 100,000 Additional paid-in capital Retained earnings 660,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $60,000. Any remaining excess acquisition-date fair value was allocated to a franchise agreement to be amortized over 10 years. During the subsequent years, Young sold Monica inventory at a 20 percent gross profit rate. Monica consistently resold this merchandise in the year of acquisition or in the period immediately following. Transfers for the three years after this business combination was created amounted to the following: Inventory Remaining Transfer at Year-End (at transfer price) $35,000 37,000 43,000 Price Year 2016 60,000 2017 80,000 2018 90,000 In addition, Monica sold Young several pieces of fully depreciated equipment on January 1, 2017, for $61,000. The equipment had originally cost Monica $100,000. Young plans to depreciate these assets over a 5-year period In 2018, Young earns a net income of $230,000 and declares and pays $80,000 in cash dividends. These figures increase the subsidiary's Retained Earnings to a $990,000 balance at the end of 2018. Monica employs the equity method of accounting. Hence, it reports $155,560 investment income for 2018 with an Investment account balance of $935,980. Under these circumstances, prepare the worksheet entries required for the consolidation of Monica Company and Young Company. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) No Transaction Debit Credit Accounts 1 1 Retained earnings, 1/1/18 (Young) Cost of goods sold Investment in Young 2 2 Equipment Accumulated depreciation No journal entry required 3 Common stock - Young 4 Additional paid-in capital - Young Retained earnings, 1/1/18 (Young) Investment in Young Noncontrolling interest in Young Franchise agreement 5 Buildings Investment in Young Noncontrolling interest in Young Common stock- Young 6 6 Retained earnings, 1/1/18 (Young) Retained earnings, 1/1/18 (Monica) Noncontrolling interest in Young Investment in Young 7 7 Dividends declared 8 Depreciation expense 8 Amortization expense Franchise agreement Buildings Sales Cost of goods sold Cost of goods sold 10 10 Inventory Accumulated depreciation 11 11 Depreciation expense LO