The trial balance data presented in P7-33 can be converted to reflect use of the cost method by inserting the following amounts in place of those presented for Prime

Company: Investment in Lane Company Stock... $160,000

Beginning Retained Earnings......... 348,000

Income from Subsidiary............. 0

Dividend Income............... 28,000

In P7-33

Required
a. Prepare the journal entries that would have been recorded on Prime’s books during 20X7 under the cost method.
b. Prepare all elimination entries needed to complete a consolidation worksheet as of December 31, 20X7, assuming Prime has used the cost method.
c. Complete a three-part consolidation worksheet as of December 31,20X7.

Transcribed Image Text:

Prime Company Debit Lane Company Debit Item Credit Credit 151,000 240,000 100,000 500,000 201,600 160,000 25,000 20,000 55,000 100,000 80,000 150,000 Cash & Accounts Receivable inventory Land Buildings & Equipment Investment in Lane Company Stodk Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Subsidiary Total 80,000 15,000 10,000 35,000 60,000 $60,000 25,000 50,000 100,000 140,000 150,000 38,0000 $1,457,600 $1,457,600$525,000 $525,000 $ 230,000 60,000 200,000 300,000 379,600 250,000