Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $102,200. At that date, the fair value of the noncontrolling interest was $43,800. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

At the date of the business combination, the book values of Smart’s assets and liabilities approximated fair value except for inventory, which had a fair value of $81,000, and buildings and equipment, which had a fair value of $185,000. At December 31, 20X4, Phone reported accounts payable of $12,500 to Smart, which reported an equal amount in its accounts receivable.

Required

a. Give the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination.

b. Prepare a consolidated balance sheet worksheet.

c. Prepare a consolidated balance sheet in good form.

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Item Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Smart Corporation Total Assets Accounts Payable Mortgage Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Phone Corporation $ 50,300 90,000 130,000 60,000 410,000 (150,000) 102,200 $692,500 $152,500 250,000 80,000 210,000 $692,500 Smart Corporation $ 21,000 44,000 75,000 30,000 250,000 (80,000) $340,000 $ 35,000 180,000 40,000 85,000 $340,000