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Python Corporation buys 80 percent of Shark Company on January 1, 2013, for $150,000. At the time, Sharks common stock was $100,000 and retained earnings totaled $80,000. It was determined that Sharks assets and liabilities were all at their fair value except for land. The trial balances of Python and Shark on December 31, 2013, are listed below.

Python Corporation Shark Company

Debit Credit Debit Credit

Cash $ 25,000 $ 10,000

Receivables (net) 10,000 11,000

Inventory, January 1 15,000 9,000

Investment in S 150,000

Plant and equipment (net) 225,000 185,000

Land 100,000 80,000

Accounts payable $ 24,000 $ 10,000

Other liabilities 80,000 100,000

Common stock ($10 par) 250,000 100,000

Retained earnings, January 1 135,000 80,000

Dividends declared 15,000 20,000

Sales 130,000 75,000

Dividend income 16,000

Purchases 55,000 25,000

Expenses 40,000 ________ 25,000 ________

$635,000 $635,000 $365,000 $365,000

Inventory, December 31 $12,000 $10,000

A. Find the difference between implied and book value

B. Record the entries in Pythons books to reflect its transactions with Shark in 2013, assuming the cost method.

To record initial investment
To record Ps share of Ss dividends

C. Prepare the workpaper entries on December 31, 2013

To eliminate Ps share of Ss equity
To allocate the difference between implied and book value
To eliminate Ps share of Ss dividends

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