Prime Corporation acquired 80 percent of Steak Company’s voting shares on January 1, 20X4, 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, 20X7, are as follows

Item	Debit			Credit			Debit			Credit
Cash	$	130,300					$	10,000
Accounts Receivable		80,000						70,000
Inventory		170,000						110,000
Buildings & Equipment		600,000						400,000
Investment in Steak Company		293,000
Cost of Goods Sold		416,000						202,000
Depreciation Expense		30,000						20,000
Other Expenses		24,000						18,000
Dividends Declared		50,000						25,000
Accumulated Depreciation				$	310,000					$	120,000
Accounts Payable					100,000						15,200
Bonds Payable					300,000						100,000
Bond Premium											4,800
Common Stock					200,000						100,000
Additional Paid-in Capital											20,000
Retained Earnings					337,500						215,000
Sales					500,000						250,000
Other Income					20,400						30,000
Income from Steak Company					25,400
Total	$	1,793,300		$	1,793,300		$	855,000		$	855,000

1. The full amount of the differential at acquisition was assigned to buildings and equipment with a remaining 10-year economic life.
2. Prime and Steak regularly purchase inventory from each other. During 20X6, Steak Company sold inventory costing $40,000 to Prime Corporation for $60,000, and Prime resold 60 percent of the inventory in 20X6 and 40 percent in 20X7. Also in 20X6, Prime sold inventory costing $20,000 to Steak for $26,000. Steak resold two-thirds of the inventory in 20X6 and one-third in 20X7.
3. During 20X7, 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 20X7. Steak continues to hold all the units purchased from Prime during 20X7.
4. Steak owes Prime $10,000 on account on December 31, 20X7.
5. Assume that both companies use straight-line depreciation and that no property, plant, or equipment has been purchased since the acquisition.

Prepare the 20X7 journal entries recorded on Prime’s books related to its investment in Steak if Prime uses the equity method

Prepare all consolidation entries needed to complete a consolidation worksheet as of December 31, 20X7

Prepare a three-part consolidation worksheet as of December 31, 20X7. (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 20X7.