SUBJECT: ADVANCED ACCOUNTING

Potter Company acquired 51,000 shares of Slytherin Companys common stock on January 1, 2018, for $408,000 when Slytherin Company had common stock ($5 par) of $300,000 and retained earnings of $200,000. On January 1, 2020, Slytherin Company issued 15,000 additional shares of its common stock for $8.50 per share. The new shares were purchased entirely by Potter Company. Slytherin Companys retained earnings had increased to $360,000 by that date. During 2020, Slytherin Company declared dividends of $40,000 and reported net income at year-end of $90,000. Potter Company uses the cost method. Assume that any difference between implied and book values relates to subsidiary land.

Required:

Prepare in general journal form the workpaper entries needed for the preparation of a consolidated statements workpaper on December 31, 2020.