Pillow Corporation acquired $80$ percent ownership of Sheet Company on January $1,20$X$7,$ for $$173,000.$ At that date, the fair value of the noncontrolling interest was $$43,250.$ The trial balances for the two companies on December $31,20$X$7,$ included the following amounts:

Item Pillow Corporation Sheet Company

Debit Credit Debit Credit

Cash $ $38,000$ $ $25,000$

Accounts Receivable $50,00055,000$

Inventory $240,000100,000$

Land $80,00020,000$

Buildings and Equipment $500,000150,000$

Investment in Sheet Company $202,000$

Cost of Goods Sold $500,000250,000$

Depreciation Expense $25,00015,000$

Other Expenses $75,00075,000$

Dividends Declared $50,00020,000$

Accumulated Depreciation $ $155,000$ $ $75,000$

Accounts Payable $70,00035,000$

Mortgages Payable $200,00050,000$

Common Stock $300,00050,000$

Retained Earnings $290,000100,000$

Sales $700,000400,000$

Income from Sheet Company $45,000$

$ $1,760,000$ $ $1,760,000$ $ $710,000$ $ $710,000$

Additional Information

On January $1,20$X$7,$ Sheet reported Buildings and Equipment with a book value of $$150,000$ and a fair value of $$191,250.$ Accumulated depreciation on Buildings and Equipment was $$60,000$ on the acquisition date.

Sheet$$s depreciable assets had an estimated economic life of $11$ years on the date of combination. Goodwill of $$25,000$ was recorded at the acquisition.

Pillow used the equity method in accounting for its investment in Sheet.

Detailed analysis of receivables and payables showed that Sheet owed Pillow $$16,000$ on December $31,20$X$7.$

Required:

Prepare all journal entries recorded by Pillow with regard to its investment in Sheet during $20$X$7.$