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Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $250,000. On that date, Steak reported retained earnings of $70,000

Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $250,000. On that date, Steak reported retained earnings of $70,000 and had $110,000 of common stock outstanding. Prime has used the equity-method in accounting for its investment in Steak. The trial balances for the two companies on December 31, 20X5, appear below.

Prime Corporation Steak Products Company
Item Debit Credit Debit Credit
Cash & Receivables $ 53,000 $ 75,000
Inventory 270,000 100,000
Land 90,000 90,000
Buildings & Equipment 510,000 160,000
Investment in Steak Products 267,000
Cost of Goods Sold 130,000 60,000
Depreciation Expense 35,000 25,000
Inventory Losses 25,000 13,000
Dividends Declared 40,000 20,000
Accumulated Depreciation $ 215,000 $ 125,000
Accounts Payable 70,000 30,000
Notes Payable 220,000 38,000
Common Stock 310,000 110,000
Retained Earnings 360,000 100,000
Sales 210,000 140,000
Income from Steak Products 35,000
$ 1,420,000 $ 1,420,000 $ 543,000 $ 543,000

Additional Information:

  1. On the date of combination (five years ago), the fair value of Steaks depreciable assets was $70,000 more than the book value. Accumulated depreciation at that date was $10,000. The differential assigned to depreciable assets should be written off over the following 10-year period.
  2. There was $20,000 of intercorporate receivables and payables at the end of 20X5.

Prepare all journal entries that Prime recorded during 20X5 related to its investment in Steak.

1A.Record Prime Corp's share of Steak Products' 20X5 income.

2B. Record Prime Corp's share of Steak Products' 20X5 dividend.

3C. Record the amortization of the excess acquisition price.

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