On January 1, 2016, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc.Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000.Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill.

Following are the individual financial records for these two companies for the year ended December 31, 2019.

Rand

Spaulding

Corp.

Inc.

Revenues

$372,000

$108,000

Expenses

(264,000)

(72,000)

Equity in subsidiary earnings

25,000

0

Net income

$133,000

$36,000

Retained earnings, January 1, 2019

$765,000

$102,000

Net income

133,000

36,000

Dividends paid

(84,000)

(24,000)

Retained earnings, December 31, 2019

$814,000

$114,000

Current assets

$150,000

$22,000

Investment in Spaulding Inc.

242,000

0

Buildings (net)

525,000

85,000

Equipment (net)

389,250

129,000

Total assets

$1,306,250

$236,000

Liabilities

$82,250

$50,000

Common stock

360,000

72,000

Additional paid-in capital

50,000

0

Retained earnings, December 31, 2019

814,000

114,000

Total liabilities and stockholders' equity

$1,306,250

$236,000

Required:

1) Prepare the journal entry at the time of the acquisition, showing all work.

2) Prepare the consolidation entries for this business combination, showing all work.

3) Prepare the consolidation worksheet for this business combination in good form.