Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31, 20X1, for $2,160,000. 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 $560,000. The fair value of the noncontrolling interest at acquisition was $720,000. The differential at acquisition was attributable to the following items:

Inventory (sold in 20X2)$27,500

Land 38,500

Goodwill 44,000

Total Differential $110,000

During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $15,400; 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 $83,000 per year for these services. On December 31, 20X8, Sword owed Prince $20,750 as the final 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 15-year life and no salvage value. The amount of the differential assigned to goodwill has not been impaired.

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.

Required: a. Compute the amount of the differential as of January 1, 20X8.

b. Verify the balance in Princes 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 answers to the nearest whole dollar amount.)

At December 31, 20X8, trial balances for Prince and Sword appeared as follows: Sword Distributors Inc. Debit Credit $ 41,000 102,400 236,900 Item Cash Current Receivables Inventory Investment in Sword Distributors Land Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Common Stock Additional Paid-in Capital Retained Earnings, January 1 Sales Other Income or Loss Income from Sword Distributors Total Prince Corporation Debit Credit $ 53,700 114,800 294,000 2,836,475 417,000 2,560,000 2,189,000 194,000 1,373,000 42,000 $ 1,100,000 92,200 841,000 93,000 1,272,000 1,468,800 4,963,975 99,000 144,000 $10,073,975 $10,073,975 1,206,000 3,130,000 511,000 69,000 226,000 12,000 $ 415,000 435,300 182,000 930,000 1,280,000 1,330,000 991,000 29,000 $5,563,300 $5,563,300 consolidation Worksheet Entries . B D E F G I > Record the excess value (differential) reclassification entry. Note: Enter debits before credits. Accounts Debit Credit Event 2 Goodwill Record entry Clear entry view consolidation entries 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 es 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.) Concoildated Prince CORPORATION AND SUBSIDIARY Concelldated Financial Statement Worksheet December 31, 20% Consolidation Entries Prinos Corp. Bword Dict OR CR Income Statement Sales Other income Less: COGS Less: Depreciation & amat ponse Less: Other expenses Income from Sword Dit Consolidated not income NCI in not income Controlling interest in NI 0 0 0 Statement of Retained Enmings Beginning balance Not income Less: Dividends declared Ending Balance Balance Sheet 0 Current receivables Inventory | Land Buildings & mant Less: Accumulated depr. Investment in Sword Dist. Goodwil Total Accets Current payables Bonds payable Common stock 0 Additional Paid in capital Retained amings NCII NA of Sword Dist. Total Liabilities & Equity