The individual financial statements for Peter Company and Smith Co. for the year ended December 31, 2017, are attached in the Excel spreadsheet.Peter acquired a 91 percent interest in Smith on January 1, 2016, in exchange for various considerations totaling $1,078,350.At the acquisition date, the fair value of the non-controlling interest was $106,650 and Smith's book value was $677,000.Smith had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $335,000.This customer list is being amortized over 10 years.

Peter sold Smith a building with a $113,000 book value (cost of $275,000) for $135,000, with a remaining life of 10 years on January 2, 2016.In addition, on January 2, 2017, Peter reports $1,000,000 in bonds outstanding with a book value of $925,000, with a 4.0% coupon rate.Smith purchased 50 percent of these bonds on the open market at a price of $410,000 on that date.The Bonds come due December 31, 2019.

Smith transfers inventory to Peter on a regular basis.In 2016, Smith shipped inventory costing $171,000 to Peter at a price of $225,000.During 2017, Smith shipped goods totaling $267,000, which cost Smith $197,580.In year-ended 2016, 35% of the goods, and in year-ended 2017 40% of the goods, had not been resold to third parties by the end of the year.In addition, at the end of 2017, Peter owes Smith $32,000 due to these shipments.

1)Prepare all of the consolidation worksheet adjustment entries for 2017, including any supporting schedules as necessary. as follows:

S, A, I, D, E entries

P, G, *G, TI entries

*TA, ED entries

Bonds entry

*C entry

Additional information:

Income in 2016 reported by Smith was $262,000;

Dividends paid in 2016 by Smith was $42,000.

Peter and Smith Working Paper for Consolidated Statements 12/31/ 19 Consolidation Entries Accounts Peter Smith Debit Credit Noncontrolling Consolidated Sales (3,128,500) (1,102,000) Cogs 1,925,600 687,500 Expenses 219,000 92,500 Interest expense bonds 65,000 Interest income bond investment (50,000) Equity in Smith Income (338,520) Separate company net income (1,257,420) (372,000) Consolidated net income NCI in Smrth' Income Controlling interest in Cons Net Income Retained Earnings 1/1 (625,000) Retained Earnings 111 (487,000) Net Income (1,257,420) (372,000) Dividends paid 1 1 5,000 40,000 Retained Eamings 12/31 (1,767,420) (819,000) Cash 177,000 118,000 Receivables 625,700 220,400 Inventory 673,960 240,625 Investment in Smith 1,580,670 Investment in Peter bonds 440,000 Land 344,090 529,975 Buildings, and equip, net 522,100 300,000 Total Assets 3,923,520 1,849,000 Clnrentliabilities (596,100) (620,000) Bonds payable (1,000,000) Discmmt on bonds 50,000 NonConirolling Interest in Smith Common Stock (610,000) (320,000) Additional PaidInCapital (90,000) Retained Earnings 12/31 (1,767,420) (819,000) Total Liab. and SE (3,923,520) (1,849,000)