On January 1, 2017, P Company purchased 85% of the outstanding common stock of S Company for $262,500. On that date, S Companys stockholders equity consisted of common stock, $75,000; other contributed capital, $30,000; and retained earnings, $105,000. P Company paid more than the book value of net assets acquired because the recorded cost of S Companys land was significantly less than its fair value.

During 2017 S Company earned $111,000 and declared and paid a $37,500 dividend. P Company used the partial equity method to record its investment in S Company.

Required:

A. Prepare the investment related entries on P Companys books for 2017.

B. Prepare the workpaper eliminating entries for a workpaper on December 31, 2017.