Power Corporation acquired 90% of Snyder Companys 1,250 shares of outstanding $100 par common stock on July 1, 2016 for $198,000. The excess of the current fair value of Snyders identifiable net assets over the carrying amounts on July 1, 2016, was attributable as follows:

To inventories(fifo)	$4,000
To equipment(five year remaining life)	$5,000

In addition, on July 1, 2016, Power acquired in the open market for $42,000, $39,000 of Snyder Companys 6% bonds payable at a yield of 5%. Interest is payable by Snyder each June 30 and December 31.

Separate financial statements for Power Corporation and Snyder Company for the periods ended December 31, 2016, were as follows:

	Power(year ended 12/31/16)	Snyder(six months ended 12/31/16)
Revenue:
Net Sales	$960,150	$505,000
Interest Revenue	1,050
Income of Subsidiary	18,000
Total:	$979,200	$505,000
Cost/Expense/Losses:
Cost of Goods Sold	$770,000	$384,000
Operating Expenses	121,140	98,450
Interest Expense		2,550
Gain on Sale of Equipment	5,000
Totals	$896,140	$485,000
Net Income	$83,060	$20,000
Retained Earnings, Beginning of Period	$220,000	$50,000
Add: Net Income	83,060	20,000
Subtotal:	$303,060	$70,000
Less: Dividends Declared	36,000	9,000
Retained Earnings, End of Period	$267,060	$61,000

	Assets
Intercompany Accounts Receivable	$100
Inventory (fifo)	254,835	75,000
Investment in Snyder Stock	207,900
Investment in Snyder Bonds	41,790
Plant Assets	794,000	280,600
Accumulated Depreciation on Plant Assets	(260,000)	(30,000)
Other Assets	613,775	73,400
Total Assets:	$1,652,400	$399,000

	Liabilities and Equity
Intercompany Accounts Payable		$100
Bonds Payable	600,000	85,000
Other Liabilities	376,340	115,900
Common Stock, $100 par	360,000	125,000
Excess Paid in Capital	49,000	12,000
Retained Earnings	267,060	61,000
Total Liabilities and Equity	$1,652,400	$399,000

Additional Information:

During 2016 Power sold to Snyder inventory for $60,000 that had cost Power $40,000. Snyder held $18,000 of this purchase in inventory at the end of the year.

During 2016 Snyder sold to Power inventory for $100,000 that had cost Snyder $80,000. Power held $20,000 of this purchase in inventory at the end of the year.

On October 1, 2016, Power had sold to Snyder for $20,000 equipment having a carrying amount of $15,000 on that date. Snyder established a five-year remaining economic life, no residual value, and the straight-line method of depreciation for the equipment. Snyder includes depreciation expense in operating expenses.

Goodwill was unimpaired as of December 31, 2016.

Required:

Prepare the journal entries for Power to acquire the ownership in Snyder and prepare the entries made by Power under the simple equity method. Prove that the ending amounts for the investment account and the income of subsidiary account are correct as shown in the financial statements.

Prepare a working paper for a consolidated income statement, statement of retained earnings, and balance sheet for the year ending December 31, 2016. You will need to convert the financial statements given into trial balances for the worksheet meaning that the beginning retained earnings should be shown on the trial balance together with all asset, liability, equity, revenue, expense, and dividend accounts as though the books had not been closed.