Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $270,000. On that date, Steak reported retained earnings of $78,000 and had $114,000 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		$	57,000								$	79,000
Inventory			274,000									104,000
Land			94,000									94,000
Buildings & Equipment			514,000									164,000
Investment in Steak Products			279,800
Cost of Goods Sold			134,000									64,000
Depreciation Expense			39,000									29,000
Inventory Losses			29,000									16,200
Dividends Declared			44,000									24,000
Accumulated Depreciation						$	219,000								$	133,000
Accounts Payable							74,000									34,000
Notes Payable							228,000									33,200
Common Stock							314,000									114,000
Retained Earnings							376,800									104,000
Sales							214,000									156,000
Income from Steak Products							39,000
		$	1,464,800			$	1,464,800				$	574,200			$	574,200

Additional Information:

On the date of combination (five years ago), the fair value of Steaks depreciable assets was $78,000 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.

There was $24,000 of intercorporate receivables and payables at the end of 20X5.

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

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

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

Record the amortization of the excess acquisition price.

b. Prepare all consolidating entries needed to prepare consolidated statements for 20X5.

Record the basic consolidation entry.

Record the amortized excess value reclassification entry.

Record the excess value (differential) reclassification entry.

Record the entry to eliminate the intercompany accounts.

Record the optional accumulated depreciation consolidation entry.

c. Prepare a three-part worksheet as of December 31, 20X5.

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 Less: Inventory losses come from Steak Products Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Assets Cash and receivables Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Steak Products Goodwil Total Assets Liabilities & Equity Accounts payable Notes payable Common stock Retained earnings Total Liabilities & Equity