PROVIDE ALL CALCULATIONS USED

Rossman Corporation holds 75 percent of the common stock of Schmid Distributors Inc., purchased on December 31, 20X1, for $2,340,000. At the date of acquisition, Schmid reported common stock with a par value of $1,000,000, additional paid-in capital of $1,350,000, and retained earnings of $620,000. The fair value of the noncontrolling interest at acquisition was $780,000. The differential at acquisition was attributable to the following items:

Inventory (sold in 20X2)	$30,000
Land	56,000
Goodwill	64,000
Total Differential	$150,000

During 20X2, Rossman sold a plot of land that it had purchased several years before to Schmid at a gain of $23,000; Schmid continues to hold the land. In 20X6, Rossman and Schmid entered into a five-year contract under which Rossman provides management consulting services to Schmid on a continuing basis; Schmid pays Rossman a fixed fee of $80,000 per year for these services. At December 31, 20X8, Schmid owed Rossman $20,000 as the final 20X8 quarterly payment under the contract.

On January 2, 20X8, Rossman paid $250,000 to Schmid to purchase equipment that Schmid was then carrying at $290,000. Schmid had purchased that equipment on December 27, 20X2, for $435,000. 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, the trial balances for Rossman and Schmid appeared as follows:

............................................................Rossman Corp......................................... Schmid Distributors Inc.

Item	Debit	Credit	Debit	Credit
Cash	50,700		38,000
Current Receivables	101,800		89,400
Inventory	286,000		218,900
Investment in Schmid Stock	2,974,000
Land	400,000		1,200,000
Buildings/Equipment	2,400,000		2,990,000
Cost of Goods Sold	2,193,000		525,000
Depreciation & Amortization	202,000		88,000
Other Expenses	1,381,000		227,000
Dividends Declared	50,000		20,000
Accumulated Depreciation		1,105,000		420,000
Current Payables		86,200		76,300
Bonds Payable		1,000,000		200,000
Common Stock		100,000		1,000,000
Additional Paid-in Capital		1,272,000		1,350,000
Retained Earnings, Jan 1		1,474,800		1,400,000
Sales		4,801,000		985,000
Other Income or Loss		90,000
Income from Schmid		109,500
Total	$10,038,500	$10,038,500	$5,431,300	$5,431,300

As of December 31, 20X8, Schmid had declared but not yet paid its fourth-quarter dividend of $5,000. Both companies use straight-line depreciation and amortization. Rossman uses the fully adjusted equity method to account for its investment in Schmid.

REQUIRED (Provide all calculations used)

a. Compute the amount of the differential as of January 1, 20X8.

b. Verify the balance in Rossmans Investment in Schmid Stock account as of December 31, 20X8.

c. Present all elimination entries that would appear in a three-part consolidation worksheet as of December 31, 20X8.

d. Prepare and complete a three-part worksheet for the preparation of consolidated financial statement for 20X8.