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 noncontrolling 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 $82,000 per year for these services. At December 31, 20X8, Sword owed Prince $20,500 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		$	57,700								$	45,000
Current Receivables			109,800									97,400
Inventory			297,000									218,900
Investment in Sword Distributors			2,899,600
Land			420,000									1,204,000
Buildings & Equipment			2,580,000									2,990,000
Cost of Goods Sold			2,173,000									513,000
Depreciation & Amortization			192,000									82,000
Other Expenses			1,374,000									226,000
Dividends Declared			43,000									13,000
Accumulated Depreciation						$	1,094,000								$	403,000
Current Payables							88,200									227,300
Bonds Payable							803,000									185,000
Common Stock							92,000									950,000
Additional Paid-in Capital							1,268,000									1,300,000
Retained Earnings, January 1							1,458,800									1,350,000
Sales							5,105,350									1,000,000
Other Income or Loss							95,000					26,000
Income from Sword Distributors							141,750
Total		$	10,146,100			$	10,146,100				$	5,415,300			$	5,415,300

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

FOR PART C, QUESTIONS FROM A - H ARE:

a. Record the basic consolidation entry.

b. Record the excess value (differential) reclassification entry.

c. Record the entry to eliminate the intercompany service revenue.

d.Record the entry to eliminate the intercompany receivables/payables.

e. Record the entry to eliminate the intercompany dividend owed.

f. Record the entry to eliminate the gain on the sale of land.

g. Record the entry to eliminate the gain on equipment and to correct the asset's basis.

h. Record the entry to adjust Accumulated Depreciation.

d. Prepare and complete nd "subsidie preparationdeducted should be indicets for 20x8. (Values in thef worksheet for thep of consolidated financial , while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting ent are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly the credit column of the worksheet.) combine all credit entries into one amount and enter this amount Prince CORPORATION AND SUB SIDIARY Consolidated Financial Statement Worksheet December 31, 20X8 Consolidation Entries Sword Dist. Prince Corp. DR CR Consolidated Income Statement Sales Other income (loss) Less: COGS Less: Depreciation & amort. expense Less: Other expenses Income from Sword Dist. Consolidated net income NCI net income Controlling Interest in NI Statement Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Cash Current receivables Inventory Land Buildings & equipment Less: Accumulated depr Investment in Sword Dist Goodwill Total Assets Current payables Bonds payable Common stock Additional Paid-in capital Retained earnings NCI in NA of Sword Dist. Total Liabilities & Equity d. Prepare and complete nd "subsidie preparationdeducted should be indicets for 20x8. (Values in thef worksheet for thep of consolidated financial , while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting ent are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly the credit column of the worksheet.) combine all credit entries into one amount and enter this amount Prince CORPORATION AND SUB SIDIARY Consolidated Financial Statement Worksheet December 31, 20X8 Consolidation Entries Sword Dist. Prince Corp. DR CR Consolidated Income Statement Sales Other income (loss) Less: COGS Less: Depreciation & amort. expense Less: Other expenses Income from Sword Dist. Consolidated net income NCI net income Controlling Interest in NI Statement Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Cash Current receivables Inventory Land Buildings & equipment Less: Accumulated depr Investment in Sword Dist Goodwill Total Assets Current payables Bonds payable Common stock Additional Paid-in capital Retained earnings NCI in NA of Sword Dist. Total Liabilities & Equity