On January 1, 2017, Maddox Company acquired Smoltz Corporation by issuing 46,000 shares of its $1 par common stock with a market value of $11 per share.A building on Smoltz's books was undervalued by $30,000, resulting in annual amortization of $1,500. Also, there was an unrecorded patent valued at $70,000, resulting in annual amortization of $7,000.The separate 2017 financial statements for Maddox and Smoltz are presented below:

Required:

a.

Prepare the journal entry to record the investment in the subsidiary.

b.

Show the computation of Equity Income for 2017.

c.

Show the computation of Equity Investment at December 31, 2017.

d.

Show a consolidation worksheet for 2017.

Maddox Smoltz

Sales revenue $760,000 $420,000

Cost of goods sold (405,000 ) (266,000 )

Gross profit 355,000 154,000

Operating expenses (202,400 ) (93,700 )

Equity income 51,800 _______

Net Income $204,400 $60,300

Retained Earnings, 1/1/17 $662,300 $305,600

Net income 204,400 60,300

Dividends (41,200 ) (24,650 )

Retained Earnings, 12/31/17 $825,500 $341,250

Cash and receivables $199,800 $161,180

Inventory 243,450 135,090

Equity investment 533,150

Property, plant & equipment (Net) 745,800 304,630

Total Assets $1,722,200 $600,900

Accounts payable $41,300 $42,980

Accrued liabilities 56,400 50,070

Notes payable 0 90,000

Common stock 93,200 33,600

Additional paid-in capital 705,800 43,000

Retained Earnings, 12/31/17 825,500 341,250

Total Liabilities and Equities $1,722,200 $600,900