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Question:3. Matthews Co. acquired 80% of the common stocks of Jackson Co. on January 1, 2017.As of that date, Jackson had the following trial balance:
Debit Credit
Cash and cash equivalents$ 70,000
Accounts receivable (net)50,000
Inventory110,000
Supplies20,000
Land90,000
Buildings-net (20 years remaining life)140,000
Equipment-net (8 years remaining life)240,000
Long-term liabilities (mature 12/31/2021)180,000Common stocks300,000
Additional paid-in capital60,000
Retained earnings, 1/1/2017120,000
Totals$ 720,000$
Matthews Co. acquired 80% of the common stock of Jackson Co. for $560,000 in cash. The fair value of 20% noncontroling interest is $128,000. As of January 1, 2017, Jackson's land had a fair value of $102,000. Its buildings had a fair value of $168,000, and its equipment had a fair value of $216,000. Its long-term liabilities had a fair value of 160,000. It's unrecorded in- process Research and Development was valued at $100,000. All other assets and liabilities had fair values equal to their book values.
Matthews decided to use the initial value method for this investment.
During 2017, Jackson reported net income of $96,000 while paying dividends of 12,000.During 2018, Jackson reported net income of $132,000 while paying dividends of 36,000.
Prepare only consolidation entries on worksheet of December 31, 2018.
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