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Item 2

Item 2 50 points

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $207,000. The trial balances for the two companies on December 31, 20X7, included the following amounts:

	Prince Corporation									Sword Company
Item	Debit				Credit					Debit				Credit
Cash		$	93,000								$	43,000
Accounts Receivable			59,000									64,000
Inventory			186,000									115,000
Land			91,000									38,000
Buildings and Equipment			490,000									160,000
Investment in Sword Company			273,000
Cost of Goods Sold			490,000									251,000
Depreciation Expense			22,000									12,000
Other Expenses			56,000									56,000
Dividends Declared			67,000									27,000
Accumulated Depreciation						$	136,000								$	60,000
Accounts Payable							57,000									28,000
Mortgages Payable							198,000									116,000
Common Stock							289,000									48,000
Retained Earnings							371,000									99,000
Sales							683,000									415,000
Income from Sword Company							93,000
		$	1,827,000			$	1,827,000				$	766,000			$	766,000

Additional Information

1. On January 1, 20X7, Sword reported net assets with a book value of $147,000. A total of $27,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7.
2. Swords depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment.
3. Prince used the equity-method in accounting for its investment in Sword.
4. Detailed analysis of receivables and payables showed that Sword owed Prince $23,000 on December 31, 20X7.

Required: a. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)