Poel Corporation acquired all the voting stock of Sain Company for $500,000 on January 1, 2016 when Sain had Capital Stock of $300,000 and Retained Earnings of $150,000. Sain's assets and liabilities were faily valud except for the plant assets. The entire cost-book differential is allocated to plany assets and is fully depreciated on a straight-line basis over a 10-year period.

During 2016, Poel borrowed $25,000 on a short-term non-interest-bearing note from Sain, and on December 31, 2016, Poel mailed a check to Sain to settle the note. Sain deposited the check on January 5, 2017, but receipt of payment of the note was not reflected in Sain's December 31, 2016 balance sheet.

REQUIRED:

1. Short all preliminary computations (3 pts)

2. Complete all eliminating journal entries (12 pts)

3. Give all eliminating journal entires (5 pts)

4. Prepare all financial statements in good form:

Statement of Net Income (5 pts)

Statement of Retained Earnings (4 pts)

And a Balance Sheet (7 pts)

	Poel	Sain	Eliminations- Debit	Eliminations- Credit	Consolidated
INCOME STATEMENT Sales	$500,000	$400,000
Income from Sain	135,000
Cost of Sales	(350,000)	(200,000)
Other expenses	(100,000)	(60,000)
Net Income	185,000	140,000
RETAINED EARNINGS: Retained Earnings 1/1	$300,000	$150,000
Add: Net Income	$185,000	$140,000
Less: Dividends		(70,000)
Retained Earnings 12/31	$485,000	$220,000
BALANCE SHEET
Cash	$100,000	$200,000
Note Receivable from Poel		25,000
Other Current Assets	110,000	100,000
Plant Assets- net	200,000	425,000
Investment in Sain	565,000
TOTAL ASSETS	975,000	750,000
EQUITIES Liabilities	290,000	230,000
Capital Stock	200,000	300,000
Retained Earnings	485,000	220,000
TOTAL EQUITIES	975,000	750,000