Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $194,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: $ Prince Corporation Debit Credit 90,000 67,000 170,000 88,000 Sword Company Debit Credit $ 30,000 72,000 102,000 25,000 492,000 156,000 246,000 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 492,000 22,000 67,000 259,000 12,000 67,000 23,000 67,000 $ 152,000 70,000 191,000 289,000 327,000 697,000 75,000 $ 60,000 25,000 107,000 47,000 91,000 416,000 $1,801,000 $1,801,000 $746,000 $746,000 Additional Information 1. On January 1, 20x7. Sword reported net assets with a book value of $138.000. A total of $23.000 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 $20,000 on December 31 20X7 Required: 3. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20x2 (no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet LAB co Record the initial investment in Sword Co. Note: Enter debits before credits. Event General Journal Debit Credit Record entry View general Journal Clear entry b. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20x7. lf no entry is required for a transaction/event, select "No journal entry required in the first account field.) view transaction list Consolidation Worksheet Entries A B C D E Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit 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.) Prince PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Consolidation Entries Sword Co DR CR Consolidated Corp Income Statement Sales Less: COGS Less: Depreciation expense s Less: Other expenses Income from Sword Co. Net Income $ 0 $ 0 $ 0 $ 0 $ Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance $ o $ SOLO SON 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