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Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $188,000. 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 $ 94,000 $ 39,000
Accounts Receivable 53,000 58,000
Inventory 188,000 108,000
Land 92,000 34,000
Buildings and Equipment 494,000 161,000
Investment in Sword Company 217,000
Cost of Goods Sold 494,000 257,000
Depreciation Expense 24,000 14,000
Other Expenses 74,000 74,000
Dividends Declared 56,000 26,000
Accumulated Depreciation $ 151,000 $ 70,000
Accounts Payable 64,000 28,000
Mortgages Payable 189,000 141,000
Common Stock 294,000 45,000
Retained Earnings 348,000 84,000
Sales 685,000 403,000
Income from Sword Company 55,000
$ 1,786,000 $ 1,786,000 $ 771,000 $ 771,000


Additional Information

  1. On January 1, 20X7, Sword reported net assets with a book value of $129,000. A total of $26,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7.
  2. Sword’s 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.)

Journal entry worksheet

  • Record the initial investment in Sword Co.

Note: Enter debits before credits.

Event General Journal Debit Credit
1

Journal entry worksheet

  • Record Prince Corp's share of Sword Co.'s 20X7 income.

Note: Enter debits before credits.

Event General Journal Debit Credit
2
  • Record Prince Corp's share of Sword Co.'s 20X7 dividend.

Note: Enter debits before credits.

Event General Journal Debit Credit
3
  • Record the amortization of the excess acquisition price.

Note: Enter debits before credits.

Event General Journal Debit Credit
4



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