Pell Company purchased 90% of the stock of Salton Company on January 1, 2007, for $1,860,000, an amount equal to $60,000 in excess of the book value of equity acquired. All book values were equal to fair values at the time of purchase (i.e., any excess payment relates to subsidiary goodwill). On the date of purchase, Salton Company's retained earnings balance was $200,000. The remainder of the stockholders' equity consists of no-par common stock. During 2017, Salton Company declared dividends in the amount of $40,000, and reported net income of $160,000. The retained earnings balance of Salton Company on December 31, 2016 was $640,000. Pell Company uses the cost method to record its investment. No impairment of goodwill was recognized between the date of acquisition and December 31, 2017.
Required:
Prepare in general journal form the workpaper entries that would be made in the preparation of a consolidated statements workpaper on December 31, 2017.

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The Answer of Pell Company purchased 90% of the stock of Salton Company on January 1, 2007, for $1,860,000, an amount equal to $60,000 in excess of the book value of equity acquired. All book values were equal to fair values at the time of purchase (i.e., any excess payment relates to subsidiary goodwill). On the date of purchase, Salton Company's retained earnings balance was $200,000. The remainder of the stockholders' equity consists of no-par common stock. During 2017, Salton Company declared dividends in the amount of $40,000, and reported net income of $160,000. The retained earnings balance of Salton Company on December 31, 2016 was $640,000. Pell Company uses the cost method to record its investment. No impairment of goodwill was recognized between the date of acquisition and December 31, 2017.
Required:
Prepare in general journal form the workpaper entries that would be made in the preparation of a consolidated statements workpaper on December 31, 2017.

Pell Company Purchased 90% of the Stock of Salton Company