On January 1, 2019, Monica Company acquired 70 percent of Young Company's outstanding common stock for $686,000. The fair value of the noncontrolling interest at the acquisition date was $294,000. Young reported stockholders' equity accounts on that date as follows: Common stock-$10 par value Additional paid-in capital Retained earnings $ 300,000 80,000 500,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $80,000. Any remaining excess acquisition-date fair value was allocated to a franchise agreement to be amortized over 10 years. During the subsequent years, Young sold Monica inventory at a 40 percent gross profit rate. Monica consistently resold this merchandise in the year of acquisition or in the period immediately following. Transfers for the three years after this business combination was created amounted to the following: Transfer Price Year 2019 $ 40,000 2828 2021 60,000 70,000 Inventory Remaining at Year-End (at transfer price) $ 19,000 21,000 27,000 In addition, Monica sold Young several pieces of fully depreciated equipment on January 1, 2020, for $45,000. The equipment had originally cost Monica $68,000. Young plans to depreciate these assets over a 6-year period. In 2021. Young earns a net income of $230,000 and declares and pays $70,000 in cash dividends. These figures increase the subsidiary's Retained Earnings to a $830,000 balance at the end of 2021. Monica employs the equity method of accounting. Hence, it reports $154,220 investment income for 2021 with an Investment account balance of $841,640. Prepare the worksheet entries required for the consolidation of Monica Company and Young Company. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) 1 No Transaction 1 2 2 3 3 4 4 Answer is complete but not entirely correct. Accounts Retained earnings, 1/1/21 (Young) Cost of goods sold Equipment Investment in Young Accumulated depreciation-Equipment No journal entry required No journal entry required Common stock-Young Additional paid-in capital - Young Retained earnings, 1/1/21 (Young) Investment in Young Noncontrolling interest in Young 000 00 00000 5 5 Franchise agreement Buildings Investment in Young Noncontrolling interest in Young 6 6 Investment income Investment in Young 7 7 Investment in Young Debit Credit 8,400 8,400 23,000 37,500 0 60,500 300,000 80,000 661,600 729,210 312,480 16,000 48,000 44,000 19,200 154,220 154,220 49,000 5 5 6 6 Franchise agreement Buildings Investment in Young Noncontrolling interest in Young Investment income Investment in Young 7 7 Investment in Young Dividends declared 8 8 Depreciation expense Amortization expense Amortization expense Buildings 30 00 16,000 48,000 44,000 19,200 154,220 154,220 49,000 49,000 16,000 2,000 2,000 16,000 9 9 Sales 70,000 Cost of goods sold 70,000 10 10 Cost of goods sold Inventory 10,800 10,800 11 11 Accumulated depreciation-Equipment Depreciation expense 7,500 7,500