On January 1, 2017, P purchased 80% of the common stock of S for $80,000. S had common stock of $80.000 and retain carnings of $12.000 at that time. On December 31, 2021, the trial balances of the two companies were: P 5 Cash 13,000 14,000 Accounts receivable 37.000 36,000 Investment in S Company 80,000 0 Plant and equipment 60,000 45,000 Land 18,000 12,000 Dividends declared 10.000 12.000 Inventory. 12/31 59,600 15,000 Cost of Sales and Expenses 50,000 30,000 Total debits 314,600 164,000 Liabilities 10,000 6.000 Common stock 120,000 80,000 Retained earnings 55,000 30,000 Sales 120,000 48,000 Divided income 9,600 0 Total credits 314,600 164,000 y difference between book value and the value implied by the purchase price relates to Land, You are required to You are required to: a) Prepare the working paper entry on December 31, 2021, to establish reciprocity and convert to the equity method Answer: Debit Credit Investment account Rotuined cannings- (b) Prepare working paper elimination entries on December 31, 2021, to eliminate the investment account Answe Debit Credit ommon stock Retained (b) Prepare the working paper elimination entries on December 31, 2021, to eliminate the investment account Answer: Debit Credit Common stock Retained earnings Difference - implied and book values Noncontrolling interest Investment in S company (c) Prepare the working paper elimination entries on December 31, 2021, to eliminate the intercompany dividends: Answer: Debit Credit Dend uome-P Dividend declared - S