Peel Corporation purchased 60 percent of Split Products Company’s shares on December 31, 20X7, for $210,000. At that date, the fair value of the noncontrolling interest was $140,000. On January 1, 20X9, Peel purchased an additional 20 percent of Split’s common stock for $96,000. Summarized balance sheets for Split on the dates indicated are as follows:

Split paid dividends of $20,000 in each of the three years. Peel uses the equity method in accounting for its investment in Split and amortizes all differentials over 10 years against the related investment income. All differentials are assigned to parents in the consolidated financial statements.

Required

a. Compute the balance in Peel’s Investment in Split Products Company Stock account on December 31, 20X8.

b. Compute the balance in Peel’s Investment in Split Products Company Stock account on December 31, 20X9.

c. Prepare the consolidation entries needed as of December 31, 20X9, to complete a worksheet.

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Cash Accounts Receivable Inventory Buildings & Equipment (net) Total Assets Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equities 20X7 $ 40,000 50,000 70,000 340,000 $500,000 $ 50,000 100,000 150,000 200,000 $500,000 December 31 20X8 $ 70,000 90,000 100,000 320,000 $580,000 $100,000 100,000 150,000 230,000 $580,000 20X9 $ 90,000 120,000 160,000 300,000 $670,000 $140,000 100,000 150,000 280,000 $670,000