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 $920,000. additional pald-in capital of $1,270,000, and retained earnings of $550.000. 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 28x2) Land Goodwill Total Differential $ 35,00 49,000 56,082 $149,880 During 20x2, Prince solo a plot of land that it had purchased several years before to Sword at a gain of $19,600: 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. At December 31, 20x8. Sword owed Prince $20750 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. At December 31, 20X8. trial balances for Prince and Sword appeared as follows: Prince Corporation Sword Distributors Inc. Iten Debit Credit Debit Credit Cash $ 64,780 $ 52,800 Current Receivables 117,880 185,480 Inventory 288,888 232,980 Investment in Sword Distributors 2,832,650 Land 415,880 1,289,680 Buildings & Equipment 2,450,000 3.119.620 Cost of Goods Sold 2,186,082 517,00 Depreciation & Amortization 192,00 72,880 Other Expenses 1,365,880 209.00 Dividends Declared 42,000 12,820 Accumulated Depreciation $1,887,20 $ 410,eee Current Payables 87.220 454,300 Bonds Payable 976.000 183,000 Common Stock 88,888 920.eee Additional Paid-in Capital 1,261,080 1,279,see Retained Earnings, January 1 1,468.00 1,320, cee Sales 4,758, 150 999.000 Other Incone or Loss 93,00 28.680 Income from Sword Distributors 158, eee Total $9,953, 150 $9,953, 150 $5,547, 360 $5,547,300 As of December 31, 20X8. Sword had declared but not yet paid its fourth-quarter dividend of $5.000. Both companies use stralght-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. Answer is complete and correct. Remaining differential 105.000 Answer is not complete. Balance in investment in Sword Account c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20x8 required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to dollar amount.) Answer is complete but not entirely correct. Event Accounts Debit Credit No . 1 Income from Sword Dist. Additional paid-in capital Retained earnings Common stock NOI in Nl of Sword Dist Dividends declared Investment in Sword Dist. NCI in NA of Sword Dist. 105,000 1,270,000 1.320.000 920,000 105,000 OOOOO OOOO 12.000 2,737,500 2.737.500 B 2 56,000 49,000 Goodwil Land Investment in Sword Dist. NCI in NA of Sword Dist. 78,750 26,250 3 91,000 Other income Other expenses 90 91,000 D 2 22,750 Current payables Current receivables O 22,750 x E 5 3,750 Current payables Current receivables slo 3,750 F 6 19,800 Investment in Sword Dist. Land SIS 19,800 G 7 200.000 Equipment Loss on sale Accumulated depreciation 40,000 160,000 x H 8 4,000 Depreciation expense Accumulated depreciation olo 4,000 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.) Consolidated 5,740,150 65,000 (2.703.000) 264,000) (1.574.000) 1,264,150 1,264,150 Answer is not complete. Prince CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X8 Consolidation Entries Prince Sword DR CR Corp. Dist Income Statement Sales 4,750,150 990.000 Other income loss) 93,000 (28,000) Less: COGS (2.188.000) (517,000) Less Depreciation & amort. expense (192,000) (72.000) Less Other expenses (1.385,000) (209.000) Income from Sword Dist. Consolidated net income 1,100,150 184.000 0 0 NCI in net income Controlling Interest in NI 1.100.150 164,000 0 0 Statement of Retained Earnings Beginning balance Net income Less: Dividends declared (42,000) (12.000) 12.000 Ending Balance (42,000) (12.000) 0 12,000 Balance Sheet Cash 84,700 52.000 Current receivables 117,800 105.400 Inventory 288,000 232.900 Land 415,000 1.200.000 Buildings & equipment 2.450,000 3.110,000 Less: Accumulated depr. (1,087,000)|(410.000) Investment in Sword Dist. 2,832,850 Goodwill Total Assets 5,081,150 4.299 300 0 0 Current payables 87,200 454,300 Bonds payable 978,000 183,000 Common stock 80,000 920,000 Additional Paid-in capital 1,281.000 1.270.000 Retained earnings {42,000) (12.000) NCI in NA of Sword Dist. Total Liabilities & Equity 2,382,200 2,815,300 0 0 (42.000) (42,000) 116.700 223,200 520,900 1,624,000 5,560,000 (1,497.000) 2,832,850 9,380,450 541,500 1.159,000 1,000,000 2.531,000 5.231,500