PART C: On January 1, 2018, Pal Corporation acquired 80% of the voting stock of Secam Corporation for $24,000 when Secam had Capital Stock of $10,000 and Retained Earnings of $8,000. On this date, the book value of Secams assets and liabilities was equal to the fair value, except for inventories, which were understated on the books by $1,000 and were sold in 2018, land which was undervalued by $2,000, and equipment with a remaining useful life of 5 years under the straight-line method which was undervalued by $3,000. Any remainder was assigned to goodwill. Financial statements for the two corporations at the end of the fiscal year ended December 31, 2019 appear in the first two columns of the partially completed consolidation working papers. Pal has accounted for its investment in Secam using the equity method of accounting. Pal Corporation owed Secam Corporation $200 on open account at the end of the year. Dividends receivable in the amount of $900 payable from Secam to Pal is included in Pal's net receivables. Required: 1) Prepare the elimination entries required for consolidation on December 31, 2019. Show all your calculations. 2) Complete the consolidation working papers for Pal Corporation and Subsidiary for the year ended December 31, 2019. (25 Marks) Pal Secam Consolidated Eliminations Debit Credit $20,000 $ 13,000 1,920 (8,000) (6, 600) (2,000) (2,000) (3, 600) (1,400) INCOME STATEMENT Sales Income from Secam Cost of Sales Depreciation Expense other expenses Noncontrolling Interest Share Net income Retained Earnings 1/1 Add: Net income Less: Dividends Retained Earnings 12/31 BALANCE SHEET Cash $ 8,320 $5,020 8, 320 $ 3,000 $ 10,000 3,000 (4,000) (2,000) $9,340 $ 11,000 $2,880 S 3,800 2,200 3,000 2,000 15,000 1,200 2,400 3,200 13,400 24,640 Receivables-net Inventories Land Equipment and Buildings-net Investment in Secam Goodwill Unamortized Excess TOTAL ASSETS LIAB. EQUITY Accounts Payable Dividends Payable Capital Stock Ret. Earnings Nonctl. Interest 1/1 Noncti. Interest 12/31 LIAB & EQUITY $49, 720 $ 24,000 $ 8, 380 4,000 S 2,000 1,000 28,000 9,340 10,000 11,000 $49,720 $24,000 PART C: On January 1, 2018, Pal Corporation acquired 80% of the voting stock of Secam Corporation for $24,000 when Secam had Capital Stock of $10,000 and Retained Earnings of $8,000. On this date, the book value of Secams assets and liabilities was equal to the fair value, except for inventories, which were understated on the books by $1,000 and were sold in 2018, land which was undervalued by $2,000, and equipment with a remaining useful life of 5 years under the straight-line method which was undervalued by $3,000. Any remainder was assigned to goodwill. Financial statements for the two corporations at the end of the fiscal year ended December 31, 2019 appear in the first two columns of the partially completed consolidation working papers. Pal has accounted for its investment in Secam using the equity method of accounting. Pal Corporation owed Secam Corporation $200 on open account at the end of the year. Dividends receivable in the amount of $900 payable from Secam to Pal is included in Pal's net receivables. Required: 1) Prepare the elimination entries required for consolidation on December 31, 2019. Show all your calculations. 2) Complete the consolidation working papers for Pal Corporation and Subsidiary for the year ended December 31, 2019. (25 Marks) Pal Secam Consolidated Eliminations Debit Credit $20,000 $ 13,000 1,920 (8,000) (6, 600) (2,000) (2,000) (3, 600) (1,400) INCOME STATEMENT Sales Income from Secam Cost of Sales Depreciation Expense other expenses Noncontrolling Interest Share Net income Retained Earnings 1/1 Add: Net income Less: Dividends Retained Earnings 12/31 BALANCE SHEET Cash $ 8,320 $5,020 8, 320 $ 3,000 $ 10,000 3,000 (4,000) (2,000) $9,340 $ 11,000 $2,880 S 3,800 2,200 3,000 2,000 15,000 1,200 2,400 3,200 13,400 24,640 Receivables-net Inventories Land Equipment and Buildings-net Investment in Secam Goodwill Unamortized Excess TOTAL ASSETS LIAB. EQUITY Accounts Payable Dividends Payable Capital Stock Ret. Earnings Nonctl. Interest 1/1 Noncti. Interest 12/31 LIAB & EQUITY $49, 720 $ 24,000 $ 8, 380 4,000 S 2,000 1,000 28,000 9,340 10,000 11,000 $49,720 $24,000