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: