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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,

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 $950,000, additional paid-in capital of $1,300,000, and retained earnings of $550,000. The fair value of the non controlling interest at acquisition was $740,000. The differential at acquisition was attributable to the following items:

Inventory (sold in 20X2) $ 40,000
Land 56,000
Goodwill 64,000
Total Differential $ 160,000

During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $22,400; 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 $85,000 per year for these services. At December 31, 20X8, Sword owed Prince $21,250 as the final 20X8 quarterly payment under the contract.

On January 2, 20X8, Prince paid $240,000 to Sword to purchase equipment that Sword was then carrying at $280,000. Sword had purchased that equipment on December 27, 20X2, for $420,000. 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 Debit Credit Debit Credit
Cash $ 64,700 $ 52,000
Current Receivables 105,800 93,400
Inventory 288,000 220,900
Investment in Sword Distributors 2,910,100
Land 408,000 1,207,000
Buildings & Equipment 2,440,000 3,040,000
Cost of Goods Sold 2,191,000 513,000
Depreciation & Amortization 195,000 71,000
Other Expenses 1,366,000 217,000
Dividends Declared 42,000 12,000
Accumulated Depreciation $ 1,090,000 $ 417,000
Current Payables 89,200 255,300
Bonds Payable 902,000 187,000
Common Stock 94,000 950,000
Additional Paid-in Capital 1,270,000 1,300,000
Retained Earnings, January 1 1,466,800 1,350,000
Sales 4,850,000 992,000
Other Income or Loss 97,000 25,000
Income from Sword Distributors 151,500
Total $ 10,010,600 $ 10,010,600 $ 5,451,300 $ 5,451,300

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.

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 nearest whole dollar amount

Thank you

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