Puzzle Corporation purchased 75 percent of Sunday Company’s common stock at underlying book value on January 1, 20X3. At that date, the fair value of the noncontrolling interest was equal to 25 percent of Sunday’s book value. Trial balances for Puzzle and Sunday on December 31, 20X7, are as follows:

During 20X7, Puzzle resold inventory purchased from Sunday in 20X6. It had cost Sunday $44,000 to produce the inventory, and Puzzle had purchased it for $59,000. In 20X7, Puzzle had purchased inventory for $40,000 and sold it to Sunday for $60,000. At December 31, 20X7, Sunday continued to hold $27,000 of the inventory. Sunday had issued $200,000 of 8 percent, 10-year bonds on January 1, 20X4, at 104. Puzzle had purchased $80,000 of the bonds from one of the original owners for $78,400 on December 31, 20X5. Interest is paid annually on December 31. Assume Puzzle uses the fully adjusted equity method.

Required

a. What amount of cost of goods sold will be reported in the 20X7 consolidated income statement?

b. What inventory balance will be reported in the December 31, 20X7, consolidated balance sheet?

c. Prepare the journal entry to record interest expense for Sunday for 20X7.

d. Prepare the journal entry to record interest income for Puzzle for 20X7.

e. What amount will be assigned to the noncontrolling interest in the consolidated balance sheet prepared at December 31, 20X7?

f. Prepare all consolidation entries needed at December 31, 20X7, to complete a three-part consolidation worksheet.

g. Prepare a consolidation worksheet for 20X7 in good form.

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Item Cash Accounts Receivable Other Receivables Inventory Land Buildings & Equipment Investment in Sunday Company. Bonds Stock Cost of Goods Sold Depreciation Expense Interest & Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Other Payables Bonds Payable Bond Premium 20X7 Trial Balance Data Puzzle Corporation Debit Credit Common Stock Additional Paid-In Capital Retained Earnings Sales Interest & Other Income Income from Sunday Company Total $ 37,900 110,000 30,000 167,000 90,000 500,000 78,709 176,109 620,000 45,000 35,000 50,000 $ 155,000 118,000 40,000 250,000 250,000 40,000 282,911 750,000 15,961 37,846 $1,939,718 $1,939,718 Sunday Company Debit Credit $ 48,800 105,000 15,000 120,000 40,000 250,000 240,000 15,000 22,096 24,000 $ 75,000 35,000 20,000 200,000 5,464 50,000 169,432 320,000 5,000 $879,896 $879,896