Trim Corporation acquired 100 percent of Round Corporations voting common stock on January 1, 20X2, for $400,000.

Trim Corporation acquired 100 percent of Round Corporation’s voting common stock on January 1, 20X2, for $400,000. At that date, the book values and fair values of Round’s assets and liabilities were equal. Round reported the following summarized balance sheet data:

Round reported net income of $80,000 for 20X2 and paid dividends of $25,000.

Required
a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method.
b. Give the elimination entries needed at December 31, 20X2, to prepare consolidated financialstatements.

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Accounts Payable Bonds Payable Common Stock Retained Earnings Assets $700,000 $100,000 200,000 120,000 280,000 $700,000 Total $700,000 Total