Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $210,000. On that date, Steak reported retained earnings of $54,000 and had $102,000 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. $ Steak Products Company Debit Credit 67,000 92,000 82,000 152,000 Item Cash & Receivables Inventory Land Tand Buildings & Equipment Investment in Steak Products Cost of Goods Sold ri Depreciation Expense Inventory Losses Dividends De Declared Accumulated Depreciation Accounts Payable wo Notes Payable Common Stock Retained Earnings Sales Income from Steak Products Prime Corporation Debit Credit $ 45,000 262,000 82,000 502,000 241,400 100 122,000 27,000 17,000 32,000 $ 207,000 62,000 204,000 302,000 326,400 202,000 27,000 $1,330,400 $1,330, 400 52,000 17,000 6,600 12,000 $ 109,000 22,000 47,600 102,000 92,000 108,000 $ 480, 600 $ 480,600 Additional Information: 1. On the date of combination (five years ago), the fair value of Steak's depreciable assets was $54,000 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 $12,000 of intercorporate receivables and payables at the end of 20X5. Journal entry worksheet Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit 1 c. Prepare a three-part worksheet as of December 31, 20X5. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) PRIME CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X5 Consolidation Entries Prime Corp. Steak Products DR CR Consolidated Income Statement Sales Less: COGS Less: Depreciation expense $ 0 $ 0 $ 0 $ 0 $ 0 Less: Inventory losses Income from Steak Products Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Assets $ 0 $ 0 $ 0 $ 0 $ 0 Cash and receivables Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Steak Products Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $210,000. On that date, Steak reported retained earnings of $54,000 and had $102,000 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. $ Steak Products Company Debit Credit 67,000 92,000 82,000 152,000 Item Cash & Receivables Inventory Land Tand Buildings & Equipment Investment in Steak Products Cost of Goods Sold ri Depreciation Expense Inventory Losses Dividends De Declared Accumulated Depreciation Accounts Payable wo Notes Payable Common Stock Retained Earnings Sales Income from Steak Products Prime Corporation Debit Credit $ 45,000 262,000 82,000 502,000 241,400 100 122,000 27,000 17,000 32,000 $ 207,000 62,000 204,000 302,000 326,400 202,000 27,000 $1,330,400 $1,330, 400 52,000 17,000 6,600 12,000 $ 109,000 22,000 47,600 102,000 92,000 108,000 $ 480, 600 $ 480,600 Additional Information: 1. On the date of combination (five years ago), the fair value of Steak's depreciable assets was $54,000 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 $12,000 of intercorporate receivables and payables at the end of 20X5. Journal entry worksheet Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit 1 c. Prepare a three-part worksheet as of December 31, 20X5. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) PRIME CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X5 Consolidation Entries Prime Corp. Steak Products DR CR Consolidated Income Statement Sales Less: COGS Less: Depreciation expense $ 0 $ 0 $ 0 $ 0 $ 0 Less: Inventory losses Income from Steak Products Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Assets $ 0 $ 0 $ 0 $ 0 $ 0 Cash and receivables Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Steak Products