On January 1, 20X5, Pond Corporation purchased 75% of Skate Co.s stock at underlying value book value. At that date, the fair value of the noncontrolling interest was equal to 25% of Skate's book value. The balance sheets for Pond and Skate st January 1,20X8, and December 31, 20X8, and income statements for 20X8 were reported as follows:

BALANCE SHEET 20X8:

POND CORP. SKATE CO.

JANUARY 1 DECEMEBER 31 JANUARY 1 DECEMBERE 31

CASH $ 57,600 $ 53,100 $10,000 $47,000

ACCOUNTS RECEIVABLE 130,000 176,000 60,000 65,000

INTEREST & OTHERE RECEIVBLES 40,000 45,000 8,000 10,000

INVENTORY 100,000 140,000 50,000 50,000

LAND 50,000 50,000 22,000 22,000

BUILDIINGS & EQUIPMENT 400,000 400,000 240,000 240,000

ACCUMULATED DEPRECIATION (150,000) (185,000) (70,000) (94,000)

INVESTMENT IN SKATE CO:

STOCK 122,327 139,248

BONDS 42,800 42,494

INVESTEMENT IN TIN CO. BONDS 135,000 134,000

TOTAL ASSETS $927,727 $994,842 $320,000 $340,000

ACCOUNTS PAYABLE 60,000 65,000 16,500 11,000

INTEREST & OTHER PAYABLES 40,000 45,000 7,000 12,000

BONDS PAYABLE 300,000 300,000 100,000 100,000

BOND DISCOUNT - - (4,005) (3,597)

COMMON STOCK 150,000 150,000 30,000 30,000

ADDITIONAL PAID-IN CAPITAL 155,000 155,000 20,000 20,000

RETAINED EARNINGS 227,727 279,842 150,505 170,597

TOTAL LIABILITIES & EQUITIES $927,727 $270,84 $320,000 $340,000

INCOME STATEMENTS 20X8

POND CORP. SKATE CO.

SALES $450,000 $ 250,000

INCOME FROM SUBSIDIARY 24,421

INTEREST INCOME 18,594

TOTAL REVENUE $493,015 $ 250,000

COST OF GOODS SOLD $ 285,000 $ 136,000

OTHER OPERATING EXPENSES 50,000 40,000

DEPRECIATION EXPENSE 35,000 24,000

INTEREST EXPENSE 24,000 10,408

MISCELLANEOUS EXPENSES 11,900 9,500

TOTAL EXPENSES $405,900 $219,908

NET INCOME $87,115 $30,092

1) Pond sold building to skat for $65,000 on December 31, 20X7. Pond had purcahsed the building for $125,000 and was depreciating it on a straight-line basis over 25 years. At the time of sale, Pond reported accumulated depreciation of $75,000 and a remaining life of 10 years.

2) On July 1, 20X6, Skate sold land that it had purchased for $22,000 to Pond for $35,000. Pond is planning to build a new warehouse on the property prior to the end of 20X9.

3) Skate isued $100,00 par-value. 10-year bonds with a coupon rate of 10% on January 1, 20X5, at $95,000. On, December 31, 20X7, Pond purchased $40,000 par value of Skate's bonds for $42,800. Interest payments are made on July 1 and January 1.

4) Pond and Skate paid Dividends of $30,000 and $10,000, respectively, in 20X8. Pond and Skate regularly purchase inventory from each other.

5) During 20X7, Skate sold inventory costing $40,000 to Pond for $60,000, and Pond resold 60% of the inventory in 20X7 and 40% in 20X8. Also in 20X7, Pond sold inventory costing $20,000 to Skate for $26,000. Skate resold two-thirds of the inventory in 20X7 and one-third in 20X8.

6) During 20X8, Skate sold inventory costing $30,000 to Pond for $45,000, and Pond resold one-third of the inventory in 20X8. Also in 20X8, Pond sold inventory costing $9,000 to Skate for $12,000. Skate continues to hold all the inventory purchased from Pond during 20X8.

REQUIRED:

A) Prepare the 20X8 journal entries recorded on Ponds books related to its investment in Skate if Pond uses the fully adjusted equity method.

B) Prepare all eliminating entries needed at December 31, 20X8 to complete a three-part consolidation worksheet

C) Prepare a three-part worksheet for 20X8 in good form.