Powder Company spent $240,000 to acquire all of Sawmill Corporation's stock on January 1, 20X2. On December 31, 20X4, the trial balances of the two companies were as follows:

	Powder Company									Sawmill Corporation
Item	Debit				Credit					Debit				Credit
Cash		$	74,000								$	42,000
Accounts Receivable			130,000									53,000
Land			60,000									50,000
Buildings & Equipment			500,000									350,000
Investment in Sawmill Corporation			268,000
Cost of Services Provided			470,000									130,000
Depreciation Expense			35,000									18,000
Other Expenses			57,000									60,000
Dividends Declared			30,000									12,000
Accumulated Depreciation						$	265,000								$	93,000
Accounts Payable							71,000									17,000
Taxes Payable							58,000									60,000
Notes Payable							100,000									85,000
Common Stock							200,000									100,000
Retained Earnings							292,000									120,000
Service Revenue							610,000									240,000
Income from Sawmill Corporation							28,000
		$	1,624,000			$	1,624,000				$	715,000			$	715,000

Sawmill Corporation reported retained earnings of $100,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of 10 years from the date of acquisition. Sawmill's accumulated depreciation on the acquisition date was $25,000. At December 31, 20X4, Sawmill owed Powder $2,500.

Required: a. Prepare the following journal entries recorded by Powder with regard to its investment in Sawmill during 20X4.

b. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.

c. Prepare a three-part consolidation worksheet as of December 31, 20X4.

Journal entry worksheet B C Record Powder Co.'s 100% share of Sawmill Corp.'s 20X4 income. Note: Enter debits before credits Event General Journal Debit Credit Record entry Clear entry View general journal Journal entry worksheet Record Powder Co.'s 100% share of Sawmill Corp.'s 20X4 dividend. Note: Enter debits before credits. Event General Journal Debit Credit 2 Record entry Clear entry View general journal Journal entry worksheet Record the amortization of the excess acquisition price. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal Consolidation Worksheet Entries Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Record the amortized excess value reclassification entry Note: Enter debits before credits. Event Accounts Debit Credit 2 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Record the excess value (differential) reclassification entry. Note: Enter debits before credits. Event Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Record the consolidation entry needed due to the intercompany transactions. Note: Enter debits before credits. Event Accounts Debit Credit 4 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Record the accumulated depreciation consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit 5 Record entry Clear entry view consolidation entries POWDER COMPANY AND SUBSIDIARY Consolidated Balance Sheet Worksheet December 31, 20X4 Consolidation Entries Powder Co. Sawmill Corp DR CR Consolidated Income Statement Service revenue Less: Cost of services Less: Depreciation expense Less: Other expenses Income from Sawmill Corp Net Income Statement of Retained Earnings Beginning balance Net Income Less: Dividends declared Ending Balance Assets Cash Accounts receivable Land Buildings &equipment Less: Accumulated depreciation Investment in Sawmill Corp Total Assets Liabilities & Stockholders' Equity Accounts payable Taxes payable Notes payable Common stock Retained earnings Total Liabilities &Equity 0 0 0 0