On January 1, 20X7, Jones Company acquired 90 percent of the outstanding common stock of Smith Corporation for $1,242,000. On that date, the fair value of noncontrolling interest was equal to $138,000. The entire differential was related to land held by Smith. At the date of acquisition, Smith had common stock outstanding of $520,000, additional paid-in capital of $200,000, and retained earnings of $540,000. During 20X7, Smith sold inventory to Jones for $440,000. The inventory originally cost Smith $360,000. By year-end, 30 percent was still in Jones' ending inventory. During 20X8, the remaining inventory was resold to an unrelated customer. Both Jones and Smith use perpetual inventory systems. Income and dividend information for both Jones and Smith for 20X7 and 20X8 are as follows:

Jones Company

Income 20x7=860000 20x8=910000

Dividends 20x7=160000 20x8=200000

Smith corp.

Income 20x7=360000 20x8=420000

dividends 20x7=200000 20x8=200000

assume Jones uses the equity method to account for its investment in Smith.

Required:

Present the worksheet elimination entries necessary to prepare consolidated financial statements for 20X7.

.Present the worksheet elimination entries necessary to prepare consolidated financial statements for 20X8

Compute consolidated net income and the allocation of income to the controlling and non-controlling interests.