Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31, 20X1, for $2,100,000. At the date of acquisition, Sword reported common stock with a par value of $930,000, additional paid- In capital of $1,280,000, and retained earnings of $540,000. The fair value of the noncontrolling Interest at acquisition was $700,000. The differential at acquisition was attributable to the following items: Inventory (sold in 202) $12,500 Land Goodwill Total Differential 17,500 20,000 $50,000 During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $7,000; Sword continues to hold the land. In 20X6, Prince and Sword entered into a five-year contract under which Prince provides management consulting services to Sword on a continuing basis; Sword pays Prince a fixed fee of $95,000 per year for these services. At December 31, 20x8, Sword owed Prince $23,750 as the final 20X8 quarterly payment under the contract. On January 2, 20X8, Prince paid $280,000 to Sword to purchase equipment that Sword was then carrying at $320,000. Sword had purchased that equipment on December 27, 20X2, for $480,000. The equipment is expected to have a total 15-year 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. Item Cash Debit Credit Debit Credit 53,700 $ 41,000 Current Receivables 106,800 94,400 Inventory 291,000 235,900 Investment in Sword Distributors 2,825,375 Land 404,000 Buildings & 2,560,000 1,204,000 3,030,000 Equipment Cost of Goods Sold 2,186,000 505,000 Depreciation & 191,000 Amortization 71,000 Other Expenses 1,373,000 216,000 Dividends Declared 43,000 13,000 Accumulated $ 1,091,000 Depreciation $ 413,000 Current Payables 93,200 Bonds Payable 889,000 Common Stock 88,000 295,300 194,000 930,000 Additional Paid-in Capital Retained Earnings, January 1 Sales Other Income or Loss Income from Sword Distributors Total 1,268,000 1,280,000 1,472,800 1,330,000 4,873,875 1,002,000 99,000 159,000 34,000 $10,033,875 $10,033,875 $5,444,300 $5,444,300 As of December 31, 20x8, Sword had declared but not yet paid its fourth-quarter dividend of $5,000. Both companies use straight-line depreciation and amortization. Prince uses the fully adjusted equity method to account for its Investment in Sword. d. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20X8. (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 CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X8 Income Statement Sales Other income (loss) Less: COGS Less: Depreciation & amort. expense Less: Other expenses Income from Sword Dist. Consolidation Entries Prince Sword DR CR Consolidated Corp. Dist. Consolidated net income 0 0 0 0 0 NCI in net income Controlling Interest in NI 0 0 0 0 0 Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance 0 0 0 0 0 Balance Sheet Cash Current receivables