Jazzy Company acquired 80% of Fady Company’s outstanding common stock for $270,000 on January 1, 2020, and the fair value of non-controlling interest is estimated by $67,500. While the book value of net assets is $300,000 (CS: $200,000 and RE: $100,000). Differences are attributed as follows:

Land $10,000

Equipment $15,000 with remaining useful life of 5 years

The remaining balance is attributed to goodwill, it is impaired during 2020 by $2,000

Jazzy uses the equity method to account for investments. At end of 2020 Fady reported a net income of $100,000 and paid $20,000 in dividends. The following trial balance summarizes the financial position and operations for Jazzy and Fady as of December 31, 2021:

Required:

1. Prepare required entries in Jazzy Company at end of 2020 using the fully adjusted equity method.

2. Prepare the elimination entries at end of 2020.

3. Complete the consolidated worksheet shown below at Dec.31,2020.

  

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Income Statement Sales Less: CGS Dep. Exp Other Exp. Income from S Net Income Less: NCI share from Income NI assigned from CI RE Statement Beg. Balance Add: Net Income Less: Dividends End. Balance Jazzy Company $850,000 ($270,000) ($63,600) ($230,000) S $517,500 ($225,000) Fady Company $320,000 ($150,000) ($10,000) ($60,000) $100,000 $100,000 $100,000 ($20,000) $180,000 Elimination Entires Cr Dr Consolidated Income Statement Sales Less: CGS Dep. Exp Other Exp. Income from S Net Income Less: NCI share from Income NI assigned from CI RE Statement Beg. Balance Add: Net Income Less: Dividends End. Balance Jazzy Company $850,000 ($270,000) ($63,600) ($230,000) S $517,500 ($225,000) Fady Company $320,000 ($150,000) ($10,000) ($60,000) $100,000 $100,000 $100,000 ($20,000) $180,000 Elimination Entires Cr Dr Consolidated