Pearson Company purchased a 100% interest in Sanders Company and a 90% interest in Taylor Company on January 2, 2024, for $800,000 and $1,300,000, respectively. The account balances and fair values of the acquired companies on the acquisition date were as follows:

Sanders Company’s equipment has a remaining useful life of 10 years. Two- thirds of Taylor Company’s inventory was sold in 2024, and the rest was sold in the following year. In 2024, Sanders Company reported net income of $500,000 and declared dividends of $100,000. Taylor Company’s net income and declared dividends for 2024 were $800,000 and $200,000, respectively.

Required:
A. Prepare in general journal form the entries on the books of Pearson Corporation to account for its investments in 2024.
B. Prepare the elimination entries necessary in the consolidated statements workpaper for the year ended December 31, 2024.

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Current assets Inventory Plant and equipment (net) Land Total Current liabilities Bonds payable Capital stock Retained earnings Total Book Value $ 200,000 400,000 300,000 600,000 $1,500,000 $ 500,000 300,000 500,000 200,000 $1,500,000 Sanders Fair Value $200,000 400,000 350,000 600,000 $500,000 300,000 Taylor Book Value $ 350,000 500,000 600,000 550,000 $2,000,000 $ 300,000 600,000 800,000 300,000 $2,000,000 Fair Value $350,000 575,000 600,000 625,000 $300,000 600,000