On January 2, 20x4, Puma Co. purchased 70% of Squirrel Co.s common stock for $270,200. At that date the fair value of the noncontrolling interest was equal $115,800. On that date the Squirrels net assets had a book value of $350,000. The book values and fair values of Squirrels assets and liabilities were equal except land that had a fair value $10,000 higher than the book value, the rest of the differential is assigned to goodwill.

Puma sold inventory costing $48,000 to Squirrel for $80,000 in 2014, of which $20,000 Squirrel had in its inventory at the end of 20x4. Squirrel sold all of it to unaffiliated customers in 20x5.

Squirrel sold inventory costing $120,000 to Puma for $200,000 in 20x4. Puma resold 62.5% of it in 2014 and the remainder in 2015.

Puma sold goods costing $54,000 to Squirrel for $90,000. Squirrel continues to hold $20,000 of its purchase from Puma on December 31, 20x5,

During 2015 Squirrel sold inventory costing $74,000 to Puma for $124,000. Puma held all inventory purchased from Squirrel during 2015 on December 31, 20x5.

Assume both companies use straight-line depreciation and that all depreciable assets have a 10 year life from the date of acquisition. Puma uses the fully adjusted equity method.

The 20x5 trial balances for Puma Co. and Squirrel Co. are given below.

	Puma Co.		Squirrel Co.
Item	Debit	Credit	Debit	Credit
Cash	55,300		25,000
Accounts Rec.	26,000		70,000
Inventory	200,000		110,000
land	30,000		20,000
Equipment(net)	210,000		200,000
Investment in Squirrel Co.	265,700
Cost of Goods Sold	190,000		140,000
Depreciation Expense	40,000		20,000
Other Expenses	10,000		10,000
Dividends declared	35,000		5,000
Accounts Payable		5,000		5,000
Notes Payable		25,000		15,000
Common Stock		150,000		100,000
Add. Paid in Capital		140,000		30,000
Retained Earnings		428,000		240,000
Sales		300,000		210,000
Income from Sun Co.		14,000
	$1,062,000	$1,062,000	$600,000	$600,000

Required

Give the journal entries recorded on Pumas books in 20x5 related to its investment in Squirrel if Puma uses the equity method.

Prepare all eliminating entries needed to complete a consolidation worksheet as of December 31, 20x5.

Prepare a three-part consolidation worksheet as of December 31, 20x5.

Prepare in good form a consolidated income statement, balance sheet and statement of retained earnings for 20x5 .

Follow the steps we used in school.