Primadonna Company acquired 80 percent of the stock of Slacks Inc. on January 1, 2018, for $1,188,000. On this date, the balances of Slacks' stockholders' equity accounts were Common Stock, $800,000, and Retained Earnings, $420,000. As of that date, the fair market value for the 20% of shares not purchased by Primadonna was $297,000. On January 1, 2018, Slacks' recorded book values were equal to fair values for all items except for an unrecorded trademark with a fair value of $150,000 and a 10 year useful life. Any remaining excess acquisition-date fair value was assigned to goodwill. Slacks routinely sells merchandise inventory to Primadonna. ? During 2018, Slacks sold inventory to Primadonna for $280,000. The cost of this inventory, to Slacks, was $200,000. Finally, $40,000 remains in the ending inventory of Primadonna on December 31, 2018. ? During 2019, Slacks sold inventory to Primadonna for $300,000. The cost of this inventory, to Slacks, was $200,000. $60,000 remains in the ending inventory of Primadonna on December 31, 2019. ? During 2020, Slacks sold inventory to Primadonna for $320,000. The cost of this inventory, to Slacks, was $240,000. $136,000 remains in the ending inventory of Primadonna on December 31, 2020. On January 1, 2019, Primadonna sold equipment to Slacks for $160,000. On this date, the equipment was carried on Primadonna's books at a cost of $200,000 with accumulated depreciation of $112,000. Both companies estimated that the equipment has a remaining life of 10 years on the intercompany sale date, with no salvage value. The asset is depreciated using the straight-line method. On January 1, 2020, Primadonna sold land to Slacks for $100,000. That amount was considered to be the fair value of the land on that date. The cost of the land on Primadonna's books was $44,000. As of December 31, 2020, Slacks still owed Primadonna the entire $100,000 for this land. This liability is non-interest bearing and is included in accounts receivable of Primadonna and accounts payable of Slacks. Primadonna accounts for its investment in Slacks using the equity method. Unconfirmed profits are allocated pro-rata

Debits Primadonna Slacks Cash $96,000 $300,000 Accounts receivable 600,000 520,000 Inventories 860,800 380,000 Property, plant & equipment, net 1,088,000 840,000 Investment in Slacks 1,475,200 Cost of goods sold 1,196,000 600,000 Operating expenses 420,000 160,000 Dividends 110,000 100,000 Total debits 5,846,000 $2,900,000 Credits Accounts payable $500,000 $205,000 Notes payable 530,000 Other liabilities 400,000 35,000 Common stock 1,200,000 800,000 Retained earnings (Jan. 1, 2019) 1,240,000 860,000 Sales 1,800,000 1,000,000 Gain on sale of land 56,000 Equity income (loss) from Slacks 120,000 Total credits 5,846,000 $2,900,000