Ponce Corporation acquired 100% of Salinas Co. on January 1, 2019 for $30,000 cash when Salinas's stockholders' equity consisted of $10,000 of Capital Stock and $5,000 of Retained Earnings. The difference between the fair value and book value of Salinas's net assets was allocated solely to a patent amortized over 5 years. The separate company accounts and items for Ponce and Salinas at December 31, 2019, appear below.

Accounts or Items Ponce Corp. Salinas Corp. Sales $20,000 $15,000 Cost of Sales 9,200 4,700 Gross profit 10,800 10,300 Operating Expenses 2,300 4,000 Income from operations 8,500 6,300 Income from Salinas Corp 3,300 ------ Net income 11,800 6,300 Retained Earnings, January 1, 2019 11,000 5,000 Net income 11,800 6,300 Dividends 3,000 2,000 Retained Earnings, December 31, 2019 19,800 9,300 Assets:

Cash 2,000 1,900 Accounts Receivable (Net) 12,000 5,500 Inventory 14,000 8,000 Patent ----- ---------

Land 27,000 42,000 Building and Equipment (Net) 60,000 43,000 Investment in Salinas Corp. 31,300 -------- Total Assets 146,300 100,400

Liabilities and Equity Accounts Payable 96,500 81,100 Common Stocks 30,000 10,000 Retained Earnings 19,800 9,300 Total liabilities and Equity $146,300 $100,400

1. What method for internal purposes use Parent Company? 2. Prepare in Journal form the eliminations entries and adjustments for consolidation purposes. 3. Prepare the required consolidated financial statements.