Lance Corporation purchased 75 percent of Avery Companys common stock at underlying book value on January 1, 20X3. At that date, the fair value of the noncontrolling interest was equal to 25 percent of Avery's book value. Trial balances for Lance and Avery on December 31, 20X7, are as follows:

20X7 Trial Balance Data
	Lance Corporation						Avery Company
Item	Debit			Credit			Debit			Credit
Cash	$	44,900					$	55,800
Accounts Receivable		127,000						122,000
Other Receivables		32,000						17,000
Inventory		168,000						127,000
Land		99,000						51,000
Buildings & Equipment		502,000						259,000
Investment in Avery Company:
Bonds		70,920
Stock		177,606
Cost of Goods Sold		616,000						225,000
Depreciation Expense		42,000						12,000
Interest & Other Expenses		32,000						19,000
Dividends Declared		47,000						21,000
Accumulated Depreciation				$	142,000					$	68,000
Accounts Payable					157,097						118,480
Other Payables					35,000						15,000
Bonds Payable					230,000						180,000
Bond Premium											4,320
Common Stock					230,000						30,000
Additional Paid-In Capital					35,000
Retained Earnings					282,180						150,000
Sales					761,000						335,000
Interest & Other Income					19,000						8,000
Income from Avery Co.					67,149
Total	$	1,958,426		$	1,958,426		$	908,800		$	908,800

During 20X7, Lance resold inventory purchased from Avery in 20X6. It had cost Avery $54,000 to produce the inventory, and Lance had purchased it for $69,000. In 20X7, Lance had purchased inventory for $50,000 and sold it to Avery for $70,000. At December 31, 20X7, Avery continued to hold $31,500 of the inventory.

Avery had issued $180,000 of 8 percent, 10-year bonds on January 1, 20X4, at 104. Lance had purchased $72,000 of the bonds from one of the original owners for $70,560 on December 31, 20X5. Both companies use straight-line write-off of premiums and discounts. Interest is paid annually on December 31. Assume Lance uses the fully adjusted equity method.

Required:

a.	What amount of cost of goods sold will be reported in the 20X7 consolidated income statement?

b.	What inventory balance will be reported in the December 31, 20X7, consolidated balance sheet?

c.	Prepare the journal entry to record interest expense for Avery for 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)