Prince Corporation holds 75 percent of the common sotck of Sword Distribuors Inc., purchased on December 31, 20x1, for $2,200,000. At the date of acquisition, Sword reported common stock with a par value of $930,000, additiona paid in capital of $1,280,000, and retained earnings of $520,000. The fair value of the noncontrolling interest at acquisition was $740,000. The differential at acquisition was $740,000. The differential was attributable to the following items:

Inventory (sold in 20x2) $57,500

Land 80,500

Goodwill 92,000

Total Goodwill $230,000

During 20x2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $32,200, Sword continues to hold land. In 20x6, Prince and Sword entered into a five year contract under which Prince provides management consulting services on a continuing basis; Sword pays Prince a fixed fee of $85,000 per year for these services. At December 31, 20x8, Sword owed Prince $21, 250 as the final quarterly payment under the contract.

On January 2, 20x8, Prince paid $260,000 to Sword to purchase equipment that Sword was then carrying at $300,000. Sword had purchased that equipment on December 27, 20x2, for $450,000. The equipment is expected to have a total 15-year life and no salvage value. The amount of differential assigned to goodwill has not been impaired.

As December 31, 20x8, trial balances for Prince and Sword appeared as follows:

Item Prince Corporation Sword Distributors Inc,

Debit Credit Debit Credit

Cash $ 58,700 $ 46,000

Current Receivables 119,800 107,400

Inventory 292,000 230,000

Investment in Sword Distributors 2,884,177

Land 409,000 1,207,000

Building & Equipment 2,590,000 3,070,000

Cost of Goods Sold 2,181,000 522,000

Depreciation & Amortization 195,000 81,000

Other Expenses 1,381,000 208,000

Dividends Declared 45,000 15,000

Accumulated Depreciation $ 1,100,000 $ 419,000

Current Payables 94,200 372,000

Bonds Payables 889,000 190,000

Common Stock 82,000 930,000

Additional Paid in Capital 1,269,000 1,280,000

Retaind Earning, January 1 1,464,000 1,330,000

Sales 5,006,425 996,000

Other Income or Loss 97,000 30,000

Income from Sword Distributors 143,000

Totals $10,155,675 $10,155,675 $5,517,300 $5,517,300

As of December 31, 20x8, Sword had declared but not yet paid its fourth dividends of $5000. Both Companies use straight-line depreciation and amortization. Prince uses fully adjusted method to account for its investment in Sword.

Required:

a. Compute the amount of the differential as of January 1, 20x8

b. Verify the balance in Prince's investment in Sword Distributors account as of December 31, 20x8

c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20x8, (if no entry is required for a transaction/event, select "no journal entry required" in the first account field" Round your answerd to the nearest dollar amount.)

d. Prepare and complete a three part worksheet for the preparation of consolidated financial statement for 20x8. Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with minus sign, while all values in "consolidation entries" columns should be entered as positive values. For accounts whre multiple adjusting entries are required, combine all debit entries into one amount and enter the amount in the debit columns of the worksheet. Similarly, combine all credits into one amount and enter this amount in the credit column of the worksheet.)