Pop Corporation acquired 70 percent of Soda Company’s voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows:

On December 31, 20X2, Soda purchased inventory for $32,000 and sold it to Pop for $48,000. Pop resold $27,000 of the inventory (i.e., $27,000 of the $48,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3.

During 20X3, Soda sold inventory purchased for $60,000 to Pop for $90,000, and Pop resold all but $24,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,600 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition.

Required

a. Give all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda.

b. Prepare a three-part consolidation worksheet for 20X3.

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Item Cash & Accounts Receivable Inventory Land Buildings & Equipment Investment in Soda Company Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Bond Premium Common Stock Retained Earnings Sales Other Income Income from Soda Company Pop Corporation Debit $ 15,400 165,000 80,000 340,000 109,600 186,000 20,000 16,000 30,000 $962,000 Credit $140,000 92,400 200,000 120,000 127,900 260,000 13,600 8,100 $962,000 Soda Company Debit $ 21,600 35,000 40,000 260,000 79,800 15,000 5,200 15,000 $471,600 Credit $ 80,000 35,000 100,000 1,600 70,000 60,000 125,000 $471,600