Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $190,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Sword Company Debit Credit $ 33,000 60,000 107,000 28,000 152,000 Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company Prince Corporation Debit Credit $ 97.000 55.000 177.000 85,000 494,000 247,000 494,000 21,000 60,000 69,000 141,000 65,000 196,000 289,000 328,000 692.000 78,000 $1,789,000 $1,789,000 257,000 11,000 60,000 21.000 $ 55,000 32,000 97,000 45,000 91,000 409,000 $729,000 $729,000 1. On January 1, 20X7, Sword reported net assets with a book value of $136.000. A total of $21,000 of the acquisition price is applied to goodwill, which was not impaired in 20x7. 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment 3. Prince used the equity-method in accounting for its investment in Sword. 4. Detailed analysis of receivables and payables showed that Sword owed Prince $27,000 on December 31, 20x7. Required: a. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20X7 (if no entry is required for a transaction/event, select "No journal entry required in the first account field.) Required: a. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20x7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet Credit General Journal Investment in Sword Company Cash Debit 190,000 I 190,000 1 / / / Investment in Sword Company Income from Sword Company / / / / 3 / Cash Investment in Sword Company 2 / / 4 / Income from Sword Company Investment in Sword Company / / b. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20x7 (if no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list transaction list Event Accounts Debit Credit A Common stock Retained earnings Income from Sword Company Dividends declared Investment in Sword Company B 2 Depreciation expenses Income from Sword Company C 3 Goodwill Buildings and equipment Accumulated depreciation Investment in Sword Company 4 Accounts payable Accounts receivable c. 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.) od enter this amount PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Consolidation Entries Prince Corp Sword Co DR CR Consolidated $ $ Income Statement Sales Less: COGS Less: Depreciation expense Less: Other expenses Income from Sword Co. Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet 692,000 (494,000) (21,000) (60,000) 78,000 195,000 409,000 (257,000) (11,000) (60,000) or 81.000 1,101,000 (751,000) (32,000) (120,000) 78,000 276,000 $ $ $ 328,000 195,000 (69,000)| 454,000 91,000 8 1,000 (21,000) 151,000 419,000 276,000 (90,000) 605,000 $
