Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31, 20x1, for $2,220,000. At the date of acquisition, Sword reported common stock with a par value of $930,000. additional paidin capital of $1,280,000, and retained earnings of $540,000. The fair value ofthe noncontrolling interest at acquisition was $740,000. The differential at acquisition was attributable to the following items: Inventory (sold in 2BX2) $ 52,588 Land 73, see Goodwill 84, 898 Total Differential $218,886 During 20x2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $29,400; Sword continues to hold the land. In 20KB. Prince and Sword entered into a veyear contract under which Prince provides management consulting services to Sword on a continuing basis: Sword pays Prince a xed fee of $85,000 per year for these services. At December 31, 20X8, Sword owed Prince $21,250 as the nal 20X8 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 157year life and no salvage value. The amount of the differential assigned to goodwill has not been impaired. At December 31, 20X8, trial balances for Prince and Sword appeared as follows: 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 15year life and no salvage value. The amount of the differential assigned to goodwill has not been impaired. At December 31, 20X8, trial balances for Prince and Sword appeared as follows: Prince Corporation Sword Distributors Inc. Iten Debit Credit Debit Credit Cash $ 58,788 $ 46,888 Current Receivables 188,888 96,488 Inventory 298,888 226,988 Investment in Sword Distributors 2,879,475 Land 432,333 1,286,888 Buildings 8: Equipment 2,428,888 3,868,888 Cost of Goods Sold 2,184,888 589,888 Depreciation 8c Amortization 187,888 75,888 Other Expenses 1,364,888 219,888 Dividends Declared 46,888 16,888 Accumulated Depreciation $1,892,888 in 483,888 Current Payables 87,288 358,388 Bonds Payable 815,888 197,888 Common Stock 82,888 938,888 Additional Paid-in Capital 1,266,888 1,288,888 Retained Earnings, January 1 1,464,888 1,338,888 Sales 4,397,225 995,333 Other Income or Loss 96,888 31,888 Income from Sword Distributors 147,758 Total $9,947,975 $9,947,975 $5,435,333 $5,485,388 As of December 31, 20X8, Sword had declared but not yet paid its fourthquarter dividend of $5,000. Both companies use straightline depreciation and amortization. Prince uses the fully adjusted equity method to account for its investment in Sword. As of December 31. 20X8, Sword had declared but not yet paid its fourthquarter dividend of $5,000. Both companies use straightline depreciation and amortization. Prince uses the fully adjusted equity method to account for its investment in Sword. Required: a. Compute the amount of the differential as of January 1, 2OX8. b. Verify the balance in Prince's Investment in Sword Distributors account as of December 31, 20X8. Consolidation Worksheet Entries A B C D E F G H Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit 1 Record entry Clear entry view consolidation entriesConsolidation Worksheet Entries