On January 1, 20X7, Pillow Corporation sold to Sheet Corporation equipment it had purchased for $225,000 and used for eight years. Pillow recorded a gain of $19,600 on the sale. The equipment has a total useful life of 15 years and is depreciated on a straight-line basis. Pillow holds 65 percent of Sheets voting common shares.

b. Prepare the journal entries recorded by Sheet during 20X7 to record the purchase of equipment and year-end depreciation.

c. Prepare the consolidation entry or entries related to the intercompany sale of equipment on needed at December 31, 20X7. A full set of consolidated financial statements.

d. Prepare the consolidation entry or entries related to the equipment required at January 1, 20X8, to prepare a consolidated sheet only.

a. Prepare the journal entry made by Pillow on January 1, 20X7, to reeord the sede of ex Journal entry worksheet Record the gain on equipment