Pringle Corporation acquired an 80% interest in Chip Corporation for $300,000 on January 1, 2012 when Chip's stockholders' equity consisted of $200,000 capital stock and $25,000 retained earnings. The excess cost over book value acquired was allocated to equipment that was undervalued by $50,000, inventory that was overvalued by $25,000 and to goodwill. The inventory was sold in 2012 and the equipment had a 5-year remaining useful life.

Chip regularly sells inventory to Pringle at 150% of cost. Intercompany sales were $120,000 in 2012 and $90,000 in 2013. Pringle's inventory included $30,000 of this merchandise at 12/31/12 and $45,000 of this merchandise at 12/31/13.

Pringle has $10,000 in accounts payable due to Chip.

 Required:

Prepare the consolidation work papers for Pringle Corporation using the process reviewed in class:

1. Calculate the unamortized difference/excess

2. Calculate the goodwill or bargain purchase gain

3. Calculate the unrealized profit for ending inventory for 2012 and 2013

4. Prepare the Purchase Price Allocation and Amortization Schedule

5. Record all necessary elimination and adjusting journal entries

6. Post the journal entries (as written in #5 above) to the Consolidation worksheet