Question 8-6 Below

Problem 8-6 (LO 4) Worksheet, direct and indirect holding, intercompany mer- chandise, machine. The following diagram depicts the relationships among Mary Company, John Company, and Joan Company on December 31, 2018 Mary Owns 60% Owns 4% John Joan Owns 50% Mary Company purchases its interest in John Company on January 1, 2016, for $204,000. John Company pu Company purchases its interest in Joan Company on January 1, 2018, for $72,000. All invest ments are accounted for under the equity method. Control over Joan Company does not occur until the January 1, 2018, acquisition. Thus, a D&D schedule will be prepared for the invest- ment in Joan as of January 1, 2018. s its interest in Joan Company on January 1, 2017, for $75,000. Mary The following stockholders' equities are available: John Joan Company Company 2015 2016 2017 $150,000 $100,000 $100,000 Paid-in capital in excess of par . . . . 75,000 75,000 80,000 $300,000 $150,000 $180,000 50,000 On January 2, 2018, Joan Company sells a machine to Mary Company for $20,000. The machine has a book value of $10,000, with an estimated life of five years and is being depre- ciated on a straight-line basis. John Company sells $20,000 of merchandise to Joan Company during 2018 to realize a gross profit of 30%. Of this merchandise, $5,000 remains in Joan Company's December 31, 2018, inventory. Joan owes John $3,000 on December 31, 2018, for merchandise delivered during 2018. Trial balances of the three companies prepared from general ledger account balances on December 31, 2018, are as follows: John Mary Com Joan Com 62,500 200,000 360,000 270,000 86,000 2,250,000 60,000 55,000 80,000 30,000 30,000 50,000 Inve 107,500 850,000 350,000 Accumulated Depreciation.. . (continued