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Matthews Co. obtained all of the common stock of Jackson Co. on January 1, 2009. As of that date, Jackson had the following trial balance:

Debit

Credit

Accounts payable

$ 60,000

Accounts receivable

$ 50,000

Additional paid

-

in capital

60,000

Buildings

net (20

-

year life)

140,000

Cash and short

-

term investments

70,000

Common stock

300,000

Equipment

net

(8

-

year life)

240,000

Inventory

110,000

Land

90,000

Long

-

term liabilities (mature 12/31/11)

180,000

Retained earnings, 1/1/09

120,000

Supplies

20,000

Totals

$ 720,000

$ 720,000

During 2009, Jackson reported net income of $96,000 while paying dividends of $12,000. During 2010, Jackson reported net income of $132,000 while paying dividends of $36,000.

Assume that Matthews Co. acquired the common stock of Jackson Co. for $588,000 in cash. As of January 1, 2009, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years.

Matthews decided to use the equity method for this investment.

Required:

(A.) Prepare consolidation worksheet entries for December 31, 2009.

(B.) Prepare consolidation worksheet entries for December 31, 2010.

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