Prepare elimination entries required on December 31, 20X7 in general journal format with the following information:

On January 1, 20X4, P acquired 80% of S for $390,000. On the date of acquisition, S had the following balance sheet:

P and S Trial Balances as of December 31, 20X7 are shown below:

S Company Balance Sheet January 1, 20X4 Liabilities and Stockholders' Equity Accounts Payable Bonds Payable Common Stock $1 par Paid in Capital Retained Earnings Assets $40,000 50,000 20,000 150,000 150,000 (100,000) 150,000 (50,000) 40,000 $100,000 $200,000 20,000 80,000 50,000 Cash Accounts Receivable Inventory an Buildings Acc. Dep'n-Bldg Equipment Acc. Dep'n-Equip Goodwill Total $450,000 Total $450,000 On the date of acquisition, the fair market values of the following net assets differed from their book values Fair Market Value $40,000 200,000 200,000 80,000 190,000 Additional Information Sold at the end of X4 Item Inventory Land Buildings Equipment Bonds Payable 15-year remaining life 10-year remaining life 5-year remaining life Any remaining excess is attributable to goodwill On January 1, 20X7, S held merchandise sold to it from P for $40,000. The beginning inventory had an applicable gross profit of 25%. During 20X7 P sold merchandise to S for $100,000. On December 31, 20X7, S held $20,000 of the merchandise in its inventory. The ending inventory had an applicable gross profit of 20%. S wrote down to $19,000 the merchandise purchased from P and remaining in its 20X7 ending inventory At December 31, 20X7, S owed P $30,000 as a result of the intercompany sale On January 1, 20X7, P held merchandise sold to it from S for $40,000. The beginning inventory had an applicable gross profit of 20%. During 20X75 sold merchandise to P for $60,000. On December 31, 20X7, P held $25,000 of the merchandise in its inventory. The ending inventory had an applicable gross profit of 30%. On January 1, 20X5, P purchased a piece of equipment with a cost of $50,000 and accumulated depreciation of $10,000 from S for $20,000. The equipment had an estimated 5-year life on January 1, 20X5, and is being depreciated by the straight-line basis with no salvage value