Question
Prince Corporation Sword Company Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense Other Expenses
Prince Corporation Sword Company Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Item Debit $ 82,000 50,000 Credit Debit $ 25,000 55,000 Credit 170,000 80,000 500,000 240,000 500,000 100,000 20,000 150,000 250,000 25,000 15,000 75,000 75,000 50,000 20,000 $ 155,000 70,000 $ 75,000 35,000 200,000 50,000 Common Stock 300,000 50,000 Retained Earnings 290,000 100,000 Sales 700,000 400,000 Income from Sword Company 57,000 $ 1,772,000 $ 1,772,000 $ 710,000 $ 710,000 Additional Information 1. On January 1, 20X7, Sword reported net assets with a book value of $150,000. A total of $20,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7. 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. 3. Prince used the equity method in accounting for its investment in Sword. 4. Detailed analysis of receivables and payables showed that Sword owed Prince $16,000 on December 31, 20X7. Required: a. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20X7. b. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7. c. Prepare a three-part consolidation worksheet as of December 31, 20X7.
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