Pitt Corporation manufactures household appliances. On January 1, 2017, Pitt acquires Streep Corporation, a furniture manufacturer. Pitt pays $840,000 for 70% of Streeps common stock. Streep has the following balance sheet on January 1, 2017:

Streep Corporation

Balance Sheet

January 1, 2017

Assets		Liabilities and Equity
Accounts receivable	$ 64,000	Current liabilities..	180,000
Inventory.	80,000	Bonds payable	200,000
Land	120,000	Common stock, $ 1 par	20,000
Buildings.	500,000	Paid-in capital in excess of par..	180,000
Accumulated depreciation.	(100,000)	Retained earnings	224,000
Equipment.	200,000
Accumulated depreciation.	(60,000)
Total assets..	$804,000	Total liabilities and equity	$804,000

Appraisal values for identifiable assets and liabilities are as follows:

Accounts receivable.	$ 64,000
Inventory (sold during 2017)..	76,000
Land..	300,000
Buildings (20-year life)	600,000
Equipment (5-year life)..	200,000
Current liabilities	180,000
Bonds payable (5-year life).	192,000
Any remaining excess is attributed to goodwill.

Pitt uses the simple equity method to account for its investment in Streep. Pitt and Streep have the following trial balances on December 31, 2019.

_________________________________________________Pitt_________ Streep_______

Cash..	314,000	120,000
Accounts Receivable.	180,000	110,000
Inventory	240,000	172,000
Land..	200,000	120,000
Investment in Streep	973,000
Buildings.	1,600,000	600,000
Accumulated Depreciation	(440,000)	(160,000)
Equipment.	300,000	200,000
Accumulated Depreciation	(180,000)	(144,000)
Accounts Payable	(120,000)	(204,000)
Bonds Payable		(200,000)
Common Stock..	(200,000)	(20,000)
Paid-In Capital in Excess of Par..	(1,800,000)	(180,000)
Retained Earnings, January 1, 2019	(728,000)	(364,000)
Sales.	(1,600,000)	(700,000)
Cost of Goods Sold..	900,000	420,000
Depreciation ExpenseBuildings	60,000	30,000
Depreciation ExpenseEquipment	30,000	28,000
Other Expenses.	280,000	136,000
Interest Expenses		16,000
Subsidiary Income.	(49,000)
Dividends Declared	40,000	20,000
Totals.	______0_	____ _ 0

On January 1, 2019, Streep held merchandise sold to it by Pitt for $24,000. This inventory had an applicable gross profit of 35%. During 2019, Pitt sold merchandise to Streep for $120,000. On December 31, 2019, Streep held $20,000 of this merchandise in its inventory. This ending inventory held an applicable gross profit rate of 40%. Streep owed Pitt $16,000 on December 31 as a result of this intercompany sale.

Pitt held $32,000 worth of merchandise in its January 1, 2019, inventory from sales from Streep. This beginning inventory had an applicable gross profit of 30%. During 2019, Streep sold merchandise to Pitt for $60,000. Pitt held $40,000 of this inventory at the end of the year. This ending inventory had an applicable gross profit of 35%. Pitt owed Streep $12,000 on December 31 as a result of this intercompany sale.

On January 1, 2017, Pitt sold equipment to Streep at a gain of $80,000. Depreciation on this equipment is computed over an 8-year life, using the straight-line method.

On January 1, 2018, Streep sold equipment with a book value of $60,000 to Pitt for $108,000. This equipment has a 6-year life and is depreciated using the straight-line method.

Directions:

The solution to the above problem should be typed and include: (1) a value analysis; (2) a D&D schedule; (3) an amortization schedule; (4) a schedule to prepare the intercompany sales-related entries on the worksheet; (4) worksheet entries in journal entry form; (5) the completed worksheet through the consolidated balance sheet column; (6) income distribution schedules; and (7) the consolidated financial statements (income statement, statement of retained earnings and balance sheet).