Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, 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, 20X7, included the the amounts listed below:

1. On January 1, 20X7, Sheet reported net assets 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. Sheets depreciable assets had an estimated economic life of 11 years on the date of combination.

2. Sheet's depreciable assets had an estimated economic life of 11 years on the date of combination.

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

4. Analysis of receivables and payables shoed that Sheet owed Pillow $16,000 on December 31, 20X7

5. Show balances in T accounts for Investment in Sheet and Income from Sheet

Required:

a. Give all equity journal entries recorded by Pillow with regard to its investment in Sheet during 20X7.

b. Give all consolidation entries needed to prepare a full set of consolidated financial statments for 20X7.

c. Prepare a three part consolidation worksheet as of December 31, 20X7.

Balance Sheet \begin{tabular}{|l|r|r|r|r|r|} \hline Cash & 38,000 & 25,000 & & 63,000 \\ \hline Accounts Receivable & 50,000 & 55,000 & 105,000 \\ \hline Inventory & 240,000 & 100,000 & 340,000 \\ \hline Land & 80,000 & 20,000 & 100,000 \\ \hline Buildings \& Equipment & 500,000 & 150,000 & 650,000 \\ \hline Less: Accumulated Depreciation & (155,000) & (75,000) & (230,000) \\ \hline Investment in Sheet Co. & 202,000 & & & 202,000 \\ \hline & & & & \\ \hline Goodwill & & & & \\ \hline Total Assets & 955,000 & 275,000 & 0 & 1,230,000 \\ \hline \hline \end{tabular} \begin{tabular}{|l|r|r|r|r|} \hline Accounts Payable & 70,000 & 35,000 & 105,000 \\ \hline Mortgage Payable & 200,000 & 50,000 & 250,000 \\ \hline Common Stock & 300,000 & 50,000 & 350,000 \\ \hline Retained Earnings & 385,000 & 140,000 & 525,000 \\ \hline NCl in NA of Sheet Co. & & & & 0 \\ \hline \end{tabular} Balance Sheet \begin{tabular}{|l|r|r|r|r|r|} \hline Cash & 38,000 & 25,000 & & 63,000 \\ \hline Accounts Receivable & 50,000 & 55,000 & 105,000 \\ \hline Inventory & 240,000 & 100,000 & 340,000 \\ \hline Land & 80,000 & 20,000 & 100,000 \\ \hline Buildings \& Equipment & 500,000 & 150,000 & 650,000 \\ \hline Less: Accumulated Depreciation & (155,000) & (75,000) & (230,000) \\ \hline Investment in Sheet Co. & 202,000 & & & 202,000 \\ \hline & & & & \\ \hline Goodwill & & & & \\ \hline Total Assets & 955,000 & 275,000 & 0 & 1,230,000 \\ \hline \hline \end{tabular} \begin{tabular}{|l|r|r|r|r|} \hline Accounts Payable & 70,000 & 35,000 & 105,000 \\ \hline Mortgage Payable & 200,000 & 50,000 & 250,000 \\ \hline Common Stock & 300,000 & 50,000 & 350,000 \\ \hline Retained Earnings & 385,000 & 140,000 & 525,000 \\ \hline NCl in NA of Sheet Co. & & & & 0 \\ \hline \end{tabular}