Paramount Co. acquired all of Sanders Company on January 1, 2018 for $2,000,000, which includes Paramount issuing 20,000 shares ($10 par) of its $80 fair value common shares and $400,000 cash. The book value of Sanders Co. on this date was $740,000 (common stock, $220,000; additional paid-in capital, $160,000, and retained earnings, $360,000). Sanders will continue as a separate legal entity.

In addition, at the date of acquisition, Sanders had a building was overvalued by $120,000 (12-year life); and, there were unrecorded customer contracts totaling $580,000 (10-year life). Paramount incurred $23,000 in direct combination costs and $42,000 in stock issue costs as a result of this acquisition.

On April 16, 2018, Sanders Co. declared a dividend of $30,000, which was paid on May 4. At December 31, 2018, Sanders Co. had net income of $140,000.

The following activity occurred from 2018 to 2021:

Instructions:

1. Prepare a T-account for Investment in Sanders. Properly label all the activity since the January 1, 2018 acquisition through 2021, showing the balance at December 31, 2021.

2. Prepare the Consolidation Worksheet Entries for 2021.