Porter Company acquired 100% of the voting stock of Seward Company on January 1, 2018 for $60,000. Seward Companys book value at the date of acquisition totaled $8,000. Seward had previously unrecorded identifiable intangibles with a total fair value of $20,000, and plant assets were overvalued by $15,000. All of Sewards other identifiable net assets had book values that approximated fair value at the date of acquisition. The identifiable intangibles have an estimated life of 5 years as of the date of acquisition, and the plant assets have an estimated life of 20 years, straight-line. There is no goodwill impairment.

It is now December 31, 2020 (three years since the date of acquisition). The December 31, 2020 preclosing trial balances of both companies appear on the consolidation working paper below. Porter uses the complete equity method to account for its investment in Seward. Information on intercompany transactions is as follows:

1. Seward sells merchandise to Porter at a markup of 25% on cost. Porters inventory at January 1, 2020 contains $875 in merchandise purchased from Seward. Porters inventory at December 31, 2020 contains $1,125 in merchandise purchased from Seward. Total sales from Seward to Porter during 2020 were $20,000.

2. Porter sold plant assets to Seward at a gain of $1,000 on January 1, 2018. Remaining life of the plant assets at the date of sale to Seward was 5 years.

Required

a. Fill in the working paper below to consolidate the December 31, 2020 trial balances of Porter and Seward. Clearly label your eliminating entries (E), (R), (C), (O), and (I).

	Porter Dr (Cr)	Seward Dr (Cr)	Dr	Cr	Consol Dr (Cr)
Current assets	$ 16,000	$ 6,600
Plant assets, net	124,000	72,000
Investment in Seward	65,225	--
Identifiable intangibles	--	--
Goodwill	--	--
Liabilities	(161,025)	(55,000)
Capital stock	(14,000)	(2,000)
Retained earnings, beg.	(30,000)	(16,500)
AOCI, beg.	(2,000)	(1,500)
Sales revenue	(95,000)	(35,000)
Equity in NI of Seward	(400)	--
Equity in OCI of Seward	(100)	--
Cost of goods sold	62,000	23,000
Operating expenses	35,000	8,500
OC(I)L	300	(100)
Total	$ 0	$ 0