Paprika Corp. acquired $70\%$ of the $10,000$ common shares of Spice Corp. for $$250,000$ cash on January $1,2020$

The remaining shares were trading at $$28$ per share both before and after the acquisition date. On January $1,2020,$

Spice Corp. had the following assets and liabilities.

Book Value Fair Value

Cash $60,00060,000$

Inventory $40,00040,000$

Land $60,00070,000$

Buildings $(10$ year life$)150,000160,000$

Equipment $(5$ year life$)42,00072,000$

Accounts payable $(40,000)(40,000)$

Bonds payable $(10$ year life$)(100,000)(120,000)$

$212,000242,000$

In addition, Spice had an unrecorded patent valued at $30,000$ with an estimated remaining life of $10$ years and

an assembled work force having an estimated value and life of $15,000$ and $3$ years, respectively.

The companies' financials for the year ended December $31,2023$ follow:

Paprika Spice

Sales $(800,000)(350,000)$

Cost of goods sold $450,000208,500$

Depreciation expense $45,00015,500$

Operating expenses $152,00098,000$

Interest expense $-8,000$

Other income $(12,000)-$

Equity in subsidiary income $(12,040)-$

Net income $(177,040)(20,000)$

Retained earnings $-$ January $1(325,000)(142,000)$

Net income $(177,040)(20,000)$

Dividends $20,00010,000$

Ending retained earnings $(482,040)(152,000)$

Cash $242,200132,000$

Accounts receivable $90,00045,000$

Inventory $120,00056,000$

Land $100,00060,000$

Buildings, net $580,000135,000$

Equipment, net $60,00026,000$

Investment in Spice $249,840-$

Total assets $1,442,040454,000$

Accounts payable $(60,000)(102,000)$

Bonds payable $-(100,000)$

Common stock $(100,000)(10,000)$

Additional paid in capital $(800,000)(90,000)$

Retained earnings $(482,040)(152,000)$

$(1,442,040)(454,000)$

Other Information:

Paprika routinely buys components from Spice that are included in final assemblies of Paprika's products.

Sales and gross profit percentages since the acquisition are as follows:

Sales Gross Profit $\%$

One third of these sales were in ending inventory for year $202145,00020\%$

One quarter of these sales were in ending inventory for year $202232,00025\%$

One fifth of these sales were in ending inventory for year $202330,00030\%$

In addition, Paprika had sales to Spice of $$56,000$ and $$58,500$ in $2022$ and $2023,$ respectively. In $2023,$ Paprika

recognized a gross profit of $$13,500$ on these sales; goods that had been sold to Spice for $$19,500$ remained in

ending inventory. In $2022,$ goods that Spice had purchased from Paprika for $$28,000$ remained in ending inventory.

Paprika's cost of goods sold for all intercompany sales to Spice that year was $$40,000.$

Paprika owes Spice $$6,000$ on December $31$ as a result of the intercompany sales.

Spice rented space from Paprika for $$1,000$ per month throughout $2023.$ Five months of the rent for $2023$ remain

unpaid at the end of the year.

Required:

Prepare the entries needed for consolidation.

A consolidating grid is attached for your use, but you will be graded on the entries.

You must list out the entries separately from your worksheet and hand in supporting computations.

EXTRA CREDIT: Prepare the Shareholder Equity Section of the consolidated balance sheet.