Sandvel Company is a wholly owned subsidiary of Pebble, Inc. Each company maintains its own financial statements, but consolidated statements are prepared at the end of each fiscal year. At the end of the present fiscal year, the following items will affect the consolidated statements:
1. During the year, Sandvel sold chemicals to Pebble at a total price of $337,000; Sandvel's cost of these chemicals was $285,000. Pebble has sold all of these goods to outside customers.
2. Pebble owes Sandvel $73,000 of accounts payable.
3. Sandvel is indebted to Pebble on a long-term loan for $396,000. Pebble realized $32,000 of interest revenue from this long-term loan during the year.
4. As of the beginning of the year, Sandvel was carried at an equity amount of $3.1 million on Pebble's balance sheet.
Required:
Describe the elimination journal entries that would be needed in preparing consolidated statements.