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Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $187,000. The trial balances for the two companies on December 31, 20X7,

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $187,000. The trial balances for the two companies on December 31, 20X7, included the following amounts:

Prince Corporation Sword Company
Item Debit Credit Debit Credit
Cash $ 83,000 $ 34,000
Accounts Receivable 53,000 58,000
Inventory 180,000 119,000
Land 81,000 29,000
Buildings and Equipment 496,000 155,000
Investment in Sword Company 240,000
Cost of Goods Sold 496,000 251,000
Depreciation Expense 23,000 13,000
Other Expenses 64,000 64,000
Dividends Declared 51,000 25,000
Accumulated Depreciation $ 138,000 $ 65,000
Accounts Payable 54,000 23,000
Mortgages Payable 189,000 122,000
Common Stock 292,000 41,000
Retained Earnings 329,000 88,000
Sales 687,000 409,000
Income from Sword Company 78,000
$ 1,767,000 $ 1,767,000 $ 748,000 $ 748,000

Additional Information

  1. On January 1, 20X7, Sword reported net assets with a book value of $129,000. A total of $25,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7.
  2. Swords 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 $18,000 on December 31, 20X7.

Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20X7.

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