On January 1, 2017, P Company purchased 85% of the outstanding common stock of

S Company for $425,000 cash. On that date, S Companys stockholders equity

consisted of common stock, $150,000; other contributed capital, $60,000; and retained earnings,

$210,000. As of the acquisition date, S Companys land was found to have a fair value

$200,000 greater than its book value.

During 2017 S Company earned $222,000 and declared and paid a $75,000 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.