Problem 1(30 points) On January 1, 2014, Paterson Company purchased 60% of the common stock of Smith Company for $540,000. At that time Smith Stockholders equity consisted of $70,000 of Common stock $190,000 of other contributed capital and $240,000 of Hetained earnings. Any difference between implied and book value relates to Smith's land. Paterson uses the cost method to record its investment in Smith As fiscal year ends on December 31. Additional information for both companies for 2020 follows: Paterson Smith Common stock $300,000 $70,000 Other contributed capital 520,000 190.000 Retained Earnings, 1/1/2020 940,000 370.000 Net Income for 2020 262,000 89,000 Dividends declared in 2020 40,000 21.000 Required: (a). Prepare all the necessary eliminating entries on a consolidated statements workpaper on 12/31/2020 (b) Calculate the consolidated net income for 2020, Problem 2 (40 points) On January 1, 2020, Pilsner Company acquired a 70w interest in Smalley Company for $3.500.000. On that dan Suleyman stock of $500,000 and retained earnings of $1,700,000. The book values of assets and bones were equal to forte Book Value Faithe Loventory $ 55,000 $6.000 Supplies 3,000 5,500 Salaries Payable 7.500 9,700 Equipement et 130,000 320,000 Land 600.000 760.000 The inventory was sold in 2020. The equipment had me years Small Damen w 24 Problem 1(30 points) On January 1, 2014, Paterson Company purchased 60% of the common stock of Smith Company for $540,000. At that time Smith Stockholders equity consisted of $70,000 of Common stock $190,000 of other contributed capital and $240,000 of Hetained earnings. Any difference between implied and book value relates to Smith's land. Paterson uses the cost method to record its investment in Smith As fiscal year ends on December 31. Additional information for both companies for 2020 follows: Paterson Smith Common stock $300,000 $70,000 Other contributed capital 520,000 190.000 Retained Earnings, 1/1/2020 940,000 370.000 Net Income for 2020 262,000 89,000 Dividends declared in 2020 40,000 21.000 Required: (a). Prepare all the necessary eliminating entries on a consolidated statements workpaper on 12/31/2020 (b) Calculate the consolidated net income for 2020, Problem 2 (40 points) On January 1, 2020, Pilsner Company acquired a 70w interest in Smalley Company for $3.500.000. On that dan Suleyman stock of $500,000 and retained earnings of $1,700,000. The book values of assets and bones were equal to forte Book Value Faithe Loventory $ 55,000 $6.000 Supplies 3,000 5,500 Salaries Payable 7.500 9,700 Equipement et 130,000 320,000 Land 600.000 760.000 The inventory was sold in 2020. The equipment had me years Small Damen w 24