Prime Corporation acquired $80$ percent of Steak Company$$s voting shares on January $1,20$X$4,$ for $$280,000$ in cash and marketable securities$.$ At that date, the noncontrolling interest had a fair value of $$70,000$ and Steak reported net assets of $$300,000.$ Assume Prime uses the fully adjusted equity method. Trial balances for the two companies on December $31,20$X$7,$ are as follows:

Item Prime Corporation Steak Company

Debit Credit Debit Credit

Cash $ $130,300$ $ $10,000$

Accounts Receivable $80,00070,000$

Inventory $170,000110,000$

Buildings and Equipment $600,000400,000$

Investment in Steak Company $293,000$

Cost of Goods Sold $416,000202,000$

Depreciation Expense $30,00020,000$

Other Expenses $24,00018,000$

Dividends Declared $50,00025,000$

Accumulated Depreciation $ $310,000$ $ $120,000$

Accounts Payable $100,00015,200$

Bonds Payable $300,000100,000$

Bond Premium $4,800$

Common Stock $200,000100,000$

Additional Paid$-$in Capital $20,000$

Retained Earnings $337,500215,000$

Sales $500,000250,000$

Other Income $20,40030,000$

Income from Steak Company $25,400$

Total $ $1,793,300$ $ $1,793,300$ $ $855,000$ $ $855,000$

Additional Information

The full amount of the differential at acquisition was assigned to buildings and equipment with a remaining $10-$year economic life.

Prime and Steak regularly purchase inventory from each other. During $20$X$6,$ Steak Company sold inventory costing $$40,000$ to Prime Corporation for $$60,000,$ and Prime resold $60$ percent of the inventory in $20$X$6$ and $40$ percent in $20$X$7.$ Also in $20$X$6,$ Prime sold inventory costing $$20,000$ to Steak for $$26,000.$ Steak resold two$-$thirds of the inventory in $20$X$6$ and one$-$third in $20$X$7.$

During $20$X$7,$ Steak sold inventory costing $$30,000$ to Prime for $$45,000,$ and Prime sold items purchased for $$9,000$ to Steak for $$12,000.$ Before the end of the year, Prime resold one$-$third of the inventory it purchased from Steak in $20$X$7.$ Steak continues to hold all the units purchased from Prime during $20$X$7.$

Steak owes Prime $$10,000$ on account on December $31,20$X$7.$

Assume that both companies use straight$-$line depreciation and that no property, plant, and equipment has been purchased since the acquisition.

Required:

Prepare the $20$X$7$ journal entries recorded on Prime$$s books related to its investment in Steak if Prime uses the equity method.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

Prepare all consolidation entries needed to complete a consolidation worksheet as of December $31,20$X$7.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

Prepare a three$-$part consolidation worksheet as of December $31,20$X$7.$

Note: 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.

Prepare a consolidated income statement, balance sheet, and retained earnings statement for $20$X$7.$