Pirate Company purchased 60 percent ownership of Ship Corporation on January 1, 20X1, for $82,800. On that date, the noncontrolling interest had a fair value of $55,200 and Ship reported common stock outstanding of $100,000 and retained eamings of $20,000. The full amount of the differential is assigned to land to be used as a future building site. Pirate uses the fully adjusted equity method in accounting for its ownership of Ship. On December 31, 20X2, the trial balances of the two companies are as follows: Pirate Company Ship Corporation Item Debit Cash and Accounts Receivable Inventory $ 69,400 60.000 Credit Debit $ 51,200 55,000 Credit Landi 40,000 Buildings & Equipment 520,000 30,000 350,000 Investment in Ship Corporation 103,780 Cost of Goods Sold 99,800 61,000 Depreciation Expense 25,000 15,000 Interest Expense Dividends Declared 6,000 40,000 14,000 10,000 Accumulated Depreciation $175,000 $ 75,000 Accounts Payable Bonds Payable 68,800 80,000 41.200 200,000 Bond Premium 1,200 Common Stock 200,000 100,000 Retained Earnings 227.960 50.000 Sales 200.000 120,000 Income from Ship Corporation 11.020 $963,980 $963.980 $586,200 $586,200 page 289 Ship sold inventory costing $25,500 to Pirate for $42,500 in 20X1. Pirate resold 80 percent of the purchase in 20X1 and the rewinder in 20X2. Ship sold inventory costing $21,000 to Pirate in 20X2 for $35,000, and Pirate resold 70 percent of it prior to December 31, 20X2 In addition, Pirate sold inventory costing $14,000 to Ship for $28,000 in 20X2, and Ship resold all but $13,000 of its purchase prior to December 31, 20X2 Assume both companies use straight-line depreciation and that no property, plant, and equipment has been purchased since the acquisition. Required 1. Record the joumal entry or entries for 20X2 on Pirate's books related to its investment in Ship Corporation, using the equity method. 7. Prepare the consolidation entries needed to complete a consolidated worksheet for 20X2 2. Prepare a three-part consolidation worksheet for 20X2.