Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $188,000. The trial balances for the two companies on December 31, 20X7, included the following amounts:

6 Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $188,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Prince Corporation Debit Credit $ 90,000 66,000 183,000 10 points Sword Company Debit Credit $ 30,000 71,000 105,000 25,000 155,000 88,000 Skipped 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 498,000 244,000 498,000 22,000 61,000 67,000 251,000 12,000 61,000 29,000 $ 139,000 63,000 184,000 286,000 370,000 690,000 85,000 $1,817,000 $ 60,000 34,000 107,000 40,000 86,000 412,000 $1,817,000 $739,000 $739,000 Additional Information 1. On January 1, 20X7, Sword reported net assets with a book value of $126,000. A total of $29,000 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 $29,000 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.) 6 6 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 $29,000 on December 31, 20x7. 10 points 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.) Skipped View transaction list Journal entry worksheet Record the initial investment in Sword Co. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal 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 Consolidation Worksheet Entries Record the basic consolidation entry. Note: Enter debits before credits. Accounts Debit Credit Event 1 Record entry Clear entry view consolidation entries and enter this edil column 6 PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Consolidation Entries Prince Corp Sword Co DR CR 10 points Consolidated Skipped $ 0 $ 0 $ 0 $ 0 $ $ 0 $ 0 $ 0 $ 0 $ 0 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 Assets Cash Accounts receivable Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Sword Co. Goodwill Total Assets Liabilities & Equity Accounts payable Mortgages payable Common stock Retained earnings Total Liabilities & Equity 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0$ 0 6 Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $188,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Prince Corporation Debit Credit $ 90,000 66,000 183,000 10 points Sword Company Debit Credit $ 30,000 71,000 105,000 25,000 155,000 88,000 Skipped 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 498,000 244,000 498,000 22,000 61,000 67,000 251,000 12,000 61,000 29,000 $ 139,000 63,000 184,000 286,000 370,000 690,000 85,000 $1,817,000 $ 60,000 34,000 107,000 40,000 86,000 412,000 $1,817,000 $739,000 $739,000 Additional Information 1. On January 1, 20X7, Sword reported net assets with a book value of $126,000. A total of $29,000 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 $29,000 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.) 6 6 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 $29,000 on December 31, 20x7. 10 points 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.) Skipped View transaction list Journal entry worksheet Record the initial investment in Sword Co. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal 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 Consolidation Worksheet Entries Record the basic consolidation entry. Note: Enter debits before credits. Accounts Debit Credit Event 1 Record entry Clear entry view consolidation entries and enter this edil column 6 PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Consolidation Entries Prince Corp Sword Co DR CR 10 points Consolidated Skipped $ 0 $ 0 $ 0 $ 0 $ $ 0 $ 0 $ 0 $ 0 $ 0 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 Assets Cash Accounts receivable Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Sword Co. Goodwill Total Assets Liabilities & Equity Accounts payable Mortgages payable Common stock Retained earnings Total Liabilities & Equity 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0$ 0