Canton Corporation is a wholly owned subsidiary of Winston Corporation. Winston acquired ownership of Canton on January 1, 20X3, for $28,000 above Canton's reported net assets. At that date, Canton reported common stock outstanding of $60,000 and retained earnings of $90,000. The differential is assigned to equipment with an economic life of seven years at the date of the business combination. Canton reported net income of $30,000 and paid dividends of $12,000 in 20X3.

Required

a. Give the journal entries recorded by Winston Corporation during 20X3 on its books if Winston accounts for its investment in Canton using the equity method.

b. Give the elimination entries needed at December 31, 20X3, to prepare consolidated financial statements.