On January 2, 2013, Pullen Company purchased, on the open market, 135,000 shares of Souza Company common stock for $665,000. At that time, Souza Company had common stock ($2 par value) of $300,000 and retained earnings of $400,000. On May 1, 2014, Pullen Company sold 13,500 of its Souza Company shares on the open market for $91,000. Changes in Souza Company retained earnings during 2014 follow:

Retained Earnings 1/1/14 ...............................................$500,000

Net Income for 2014 (earned evenly throughout the year) .........270,000

Dividends Declared on 11/1/14 and paid on 12/16/14 ..............(70,000)

Retained Earnings, 12/31/14 ..........................................$700,000

Pullen Company, which uses the cost method to record its investment in Souza Company, reported net income for 2014 amounting to $352,500. Any difference between implied and book values relates to subsidiary land.

Required:

A. Prepare the book entries Pullen Company will make during 2014 to account for its investment in Souza Company.

B. Prepare, in general journal form, the eliminating entries needed to prepare a consolidated statements work paper on December 31, 2014.

C. Compute controlling interest in consolidated net income for 2014.

D. Prepare the work paper entry to establish reciprocity for the 2015 consolidated statements work paper