Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $160,000. On that date, the fair value of the noncontrolling interest was $40,000, and Slice reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Pizza has used the equity method in accounting for its investment in Slice. Trial balance data for the two companies on December 31, 20X5, are as follows:

Additional Information

1. On the date of combination, the fair value of Slice’s depreciable assets was $50,000 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period.

2. There was $10,000 of intercorporate receivables and payables at the end of 20X5.

Required

a. Give all journal entries that Pizza recorded during 20X5 related to its investment in Slice.

b. Give all consolidation entries needed to prepare consolidated statements for 20X5.

c. Prepare a three-part worksheet as of December 31, 20X5.

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Item Cash & Receivables Inventory Land Buildings & Equipment Investment in Slice Products Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Income from Slice Products Pizza Corporation Debit $ 81,000 260,000 80,000 500,000 188,000 120,000 25,000 15,000 30,000 $1,299,000 Credit $ 205,000 60,000 200,000 300,000 314,000 200,000 20,000 $1,299,000 Slice Products Company Credit Debit $ 65,000 90,000 80,000 150,000 50,000 15,000 5,000 10,000 $465,000 $105,000 20,000 50,000 100,000 90,000 100,000 $465,000