P-5-38A.Record purchase Granite Company:Investment in Granite Company 173,000Cash 173,000Record dividend declared $20,000 x80% =16,000Cash 16,000Investment in Granite company 16,000Record equity method: (400,000-250,000-15,000-75,000) x 80%= $48,000Investment in Granite Company stock 48,000 Income from subsidiary 48,000Amortize differential: [(191,250 -150,000) x 80%]/11=3,000Income from subsidiary =48,000-45,000 =3,000Income from subsidiary 3,000Investment in Granite Company stock 3,000B.Eliminate Income from Subsidiary:Income from subsidiary 45,000Dividends Declared 16,000Investments in Granite Stock 29,000Income to Non-controlling interest: [60,000-(41,250/11)] x20% =11,250Income to Non-controlling interest 11,250Dividends declared 4,000Non-controlling interest 7,250Eliminate Beginning investment Balance: (173,000+43,250) - 150,000 =66,250Common stock – Granite Co. 50,000Retained Earnings, beginning 100,000Differential 66,250Investment in Granite Common Stock 173,000Non-controlling interest 43,250Beginning differential: 191,250-150,000= 41,25066,250 – 41,250 =25,000Goodwill 25,000Building & Equipment 41,250Differential 66,250Depreciable assets: 41,250/11 =3,750Depreciation Expense 3,750Accumulated Depreciation 3,750Eliminate interoperate:Accounts payable 16,000Account receivable 16,000C.Mortar Corporation and Granite CompanyConsolidation WorksheetDecember 31, 20X7 MortarCorp.GraniteCo.EliminationEntries  DR CRConsolidatedIncomeStatementSales 700,000 400,000 1,100,000 Less: COGS (500,000) (250,000) (750,000)Less: Depreciation Expense (25,000) (15,000) 3,750 (43,750)Less: Other Expenses (75,000) (75,000) (150,000)Income from Granite Co. 45,000 45,000 0 Consolidated Net Income 145,000 60,000 48,750 0 156,250 NCI in Net Income 11,250 (11,250)ControllingInterestinNetIncome 145,000 60,000 60,000 0 145,000StatementofRetainedEarningsBeginning Balance 290,000 100,000 100,000 290,000 Net Income 145,000 60,000 60,000 0 145,000 Less: Dividends Declared (50,000) (20,000) 20,000 (50,000)EndingBalance 385,000 140,000160,000 20,000 385,000BalanceSheetCash 38,000 25,000 63,000 Accounts Receivable 50,000 55,000 16,000 89,000 Inventory 240,000 100,000 340,000 Land 80,000 20,000 100,000 Buildings & Equipment 500,000 150,000 41,250 691,250 Less: Accumulated Depreciation (155,000) (75,000) 3,750 (233,750)Investment in Granite Co. 202,000 202,000 0 Goodwill 25,000 25,000 TotalAssets 955,000 275,000 66,250221,750 1,074,500Accounts Payable 70,000 35,000 16,000 89,000 Mortgage Payable 200,000 50,000 250,000 Common Stock 300,000 50,000 50,000 300,000 Retained Earnings 385,000 140,000160,000 20,000 385,000 NCI in NA of Granite Co. 50,500 50,500 TotalLiabilities&Equity 955,000 275,000226,000 70,500 1,074,500P5-38Comprehensive Problem: Differential ApportionmentMortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20x7, for $173,000. At that date, the fair value of the non-controlling interest was $43,250. The trial balances for two companies on December 31, 20x7, included the following amounts:Mortar corporation Granite CompanyItem Debit Credit Debit CreditCash 38,000 25,000Accounts Receivable 50,000 55,000Inventory 240,000100,000Land 80,000 20,000buildings & Equipment 500,000150,000Investment in Granite Company Stock 202,000cost of Goods Sold 500,000250,000Depreciation Expense 25,000 15,000other expenses 75,000 75,000Dividends declared 50,000 20,000Accumulated Depreciation 155,000 75,000Accounts Payable 70,000 35,000Mortgages Payable 200,000 50,000Common Stock 300,000 50,000Retained Earnings 290,000100,000Sales 700,000400,000Income for Subsidiary 45,000 1,760,0001,760,000710,000710,000Additional information1. On January 1, 20x7, Granite reported net assets with a book value of $150,000 and a fairvalue of $191,250.2. Granite’s depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of Granite’s net assets isrelated entirely to buildings and equipment.3. Mortar used the equity method in accounting for its investment in Granite.4. Detailed analysis of receivables and payables showed that Granite owed Mortar $16,000on December 31,20x7. 5. Assume that any goodwill impairment should be recorded as an adjustment in Mortar’s equity method accounts along with the amortization of other differential components.Required Give all journal entries recorded by Mortar with regard to its investment in Granite during 20x7. Give all eliminating entries needed to prepare a full set of consolidated financial statements for 20x7. Prepare a three- part consolidation worksheet as of December