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Power Corporation acquired 100 percent ownership of Upland Products Company on January 1, 20X1, for $200,000. On that date, Upland reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Power has used the equity method in accounting for its investment in Upland.

The trial balances for the two companies on December 31, 20X5, appear below.

Power

Corporation Upland

Products Company

Item Debit Credit Debit Credit

Cash & Receivables $ 43,000 $ 65,000

Inventory 260,000 90,000

Land 80,000 80,000

Buildings & Equipment 500,000 150,000

Investment in Upland Products Stock 235,000

Cost of Goods Sold 120,000 50,000

Depreciation Expense 25,000 15,000

Inventory Losses 15,000 5,000

Dividends Declared 30,000 10,000

Accumulated Depreciation $ 205,000 $ 105,000

Accounts Payable 60,000 20,000

Notes Payable 200,000 50,000

Common Stock 300,000 100,000

Retained Earnings 318,000 90,000

Sales 200,000 100,000

Income from Subsidiary 25,000

$ 1,308,000 $ 1,308,000 $ 465,000 $ 465,000

Additional Information:

1.

On the date of combination (five years ago), the fair value of Uplands depreciable assets was $50,000 more than the book value. Accumulated depreciation at that date was $10,000. The differential assigned to depreciable assets should be written off over the following 10-year period.

2. There was $10,000 of intercorporate receivables and payables at the end of 20X5.

Required:

a.

Prepare all journal entries that Power recorded during 20X5 related to its investment in Upland. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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