Parent acquired Subsidiary on January 2, 2015, at a price $250,000 in excess of book value. Of that excess, $170,000 was allocated to an unrecorded Customer List with a 10-year life, with the remainder to Goodwill. The parent uses the equity method to account for its investment in its subsidiary.

On January 2, 2018, Subsidiary sold equipment to Parent for $80,000. The equipment had a cost of $90,000 and accumulated depreciation of $37,000. The remaining life of the equipment was estimated at 6 years. Financial statements for the two companies for the year ended December 31, 2019, are presented below.

	Parent	Subsidiary
Sales Revenue	$ 6,500,000	$ 2,000,000
Cost of Goods Sold	(4,800,000)	(1,200,000)
Gross Profit	1,700,000	800,000
Operating Expenses	(840,000)	(470,000)
Income (loss) from Subsidiary	317,500
Net Income	$ 1,177,500	$ 330,000

Retained Earnings, 1/1/19	$ 5,812,100	$ 1,556,000
Net Income	1,177,500	330,000
Dividends	(245,000)	(40,000)
Retained Earnings, 12/31/19	$ 6,744,600	$ 1,846,000

Cash & Receivables	$ 1,306,400	$ 650,000
Inventory	1,506,900	813,000
Equity Investment	2,471,000
PP&E net	7,640,000	2,640,000
Total Assets	$ 12,924,300	$ 4,103,000

Accounts Payable	$ 776,000	$ 207,000
Accrued Liabilities	809,000	322,000
Notes Payable	1,350,000	1,250,000
Common Stock	423,700	83,000
Additional Paid-in Capital	2,830,000	395,000
Retained Earnings, 12/31/19	6,744,600	1,846,000
Total Liabilities and Equities	$ 12,924,300	$ 4,103,000

Required:

a. Prepare the journal entries on the books of Parent and Subsidiary to record the equipment sale.

b. Compute the amount of unrealized gain at January 1, 2019.

c. Prepare entries required under the equity method on Parent's pre-consolidation books for 2019.

d. Prepare the consolidation entries for 2019.