Penn Corporation purchased 80 percent ownership of ENC Company on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of ENC. On January 1, 20X4, Penn sold 2,000 shares of ENC’s stock for $60,000 to American School Products and recorded a $10,000 gain. Trial balances for the companies on December 31, 20X4, contain the following data:

ENC’s net income was earned evenly throughout the year. Both companies declared and paid their dividends on December 31, 20X4. Penn uses the basic equity method in accounting for its investment in ENC.

Required
a. Prepare the elimination entries needed to complete a full consolidation worksheet for 20X4.
b. Prepare a consolidation worksheet for20X4.

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ENC Company Penn Corporation Debit Credit Credit 35,000 50,000 100,000 230,000 $30,000 Cash Accounts Receivable Inventory Buildings & Equipment Investment in ENC Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared 2 70,000 120,000 650,000 162,000 210,000 20,000 21,000 100,000 15,000 25,000 10,000 15,000 $ 170,000 50,000 200,000 200,000 50,000 320,000 280,000 10,000 18,000 $95,000 20,000 30,000 100,000 20,000 130,000 170,000 Accumulated Depreciation Accounts Payable Common Stock ($10 par) Additional Paid-In Capital Retained Earnings Sales Gain on Sale of ENC Company Stock Income from ENC Total $1,298,000 $1,298,000 $565,000 $565,000