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On January 1, 20X8, ABC Company acquired 100 percent of XYZ Company's common shares at underlying book value for cash. ABC uses the equity method in accounting for its ownership of XYZ. The Investment in XYZ account had a balance of $100,000 at December 31, 20X8. XYZ reported net income of $22,000 and paid dividends of $8,000 during 20X8, and no additional common stock was issued. On December 31, 20X9, the pre-closing trial balances of the two companies are as follows:

	ABC Co.				XYZ Co.
Item	Debit		Credit		Debit		Credit
Current Assets	$362,000				$111,000
Depreciable Assets	270,000				170,000
Investment in XYZ Co.	?
Other Expenses	120,000				40,000
Depreciation Expense	40,000				16,000
Dividends Declared	44,000				36,000
Accumulated Depreciation			$160,000				$ 71,000
Current Liabilities			70,000				30,000
Long-Term Debt			150,000				50,000
Common Stock			100,000				51,000
Retained Earnings			220,000				49,000
Sales			200,000				122,000
Income from XYZ Co.			?

a) Prepare all journal entries on ABCs books from January 1, 20X8 December 31, 20X9.

Meaning the JEs for sale of company from ABCs view, the JEs for dividends and how much equity they have at end of year.

b) What is the balance of XYZ Retained Earnings on January 1, 20X8.

c) Prepare the eliminating entry necessary on December 31, 20X8.

To close T accounts I think at start of year

d) Prepare the eliminating entry necessary on December 31, 20X9.

to close T accounts at end of year i think

e) What is the consolidated balance of the Dividends Declared account at December 31, 20X9? ending balance?

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